Presumptive income from plying, hiring or leasing goods carriages

The provision

Section 44AE of the Income-tax Act, 1961 (now section 58(2), Table: Sl. No. 2 of the Income-tax Act, 2025) lets a small transporter declare income at a fixed amount per vehicle, without keeping books of account or getting them audited. It reduces compliance for truck owners, whose receipts are often in small amounts and hard to record.

Who is covered

1. Any assessee (individual, Hindu undivided family, firm, company) engaged in the business of plying, hiring or leasing goods carriages.
2. whose fleet never exceeds ten goods carriages on any day of the tax year. A vehicle taken on hire purchase or instalments counts as owned even if some instalments are unpaid (section 58(11)).
3. If the assessee owns more than ten goods carriages at any time in the year, the provision does not apply for that year, and income is computed from the books.

Income deemed (section 58(2), Table: Sl. No. 2, column E)

For each vehicle, for every month or part of a month it is owned in the year:

The presumptive amount is computed for each vehicle, for every month or part of a month it is owned, and the income is the aggregate of those amounts or the higher profit claimed to have been actually earned, whichever is higher (section 58(2), Table: Sl. No. 2, column E). Under the 1961 Act the comparison is expressly made vehicle by vehicle: the income from each goods carriage is the presumptive amount or the amount actually earned from that vehicle, whichever is higher (section 44AE(2)); the income deemed is the total of the amounts so found for all the vehicles. It does not depend on whether the vehicle was actually plied.

Other provisions

1. No further deduction: no loss, allowance or deduction is allowed against the income so computed (section 58(4)), and the written down value of the vehicles is computed as if depreciation had been allowed each year (section 58(6)).
2. Firm: salary and interest paid to partners are deducted from the presumptive income, within the limits of section 35(e) (section 58(5)).
3. Books and audit: the requirements to keep books (section 62) and get them audited (section 63) do not apply, and the receipts of this business are left out in applying their monetary limits (section 58(10)).
4. Lower income: an assessee who claims lower profit than the presumptive figure, and whose total income exceeds the basic exemption limit, must keep books and have them audited (section 58(3)).

Illustration (our own)

Mr. Sandhu owns three heavy goods vehicles of 15 tons gross vehicle weight each throughout tax year 2026-27, and buys a light goods vehicle on 10 September 2026.

• Heavy vehicles: 3 × 15 tons × ₹1,000 × 12 months = ₹5,40,000.
• Light vehicle: ₹7,500 × 7 months (September, a part month, counts as a full month) = ₹52,500.
• Presumptive income = ₹5,92,500 (the total for all vehicles), unless he claims a higher profit actually earned from the business as a whole, which is then his income.