Section 44AE is covered under the Presumptive Taxation Scheme of Income-tax act, 1961. The presumptive taxation was introduced to grant relief to small businesses or professions from the issue of maintaining books of accounts and getting their accounts audited.

The Presumptive Taxation Scheme includes 3 different Sections – Section 44AD, Section 44AE Section 44ADA. 

Any business person acquiring presumptive taxation can declare income at a prescribed rate. they will get complete relief from maintaining books of account and getting their accounts audited. 

In this blog, we are visiting to learn the specifics of Section 44AE of the Income-tax act. 

The law designed Section 44AE to allow relief to taxpayers. they’ll be people who own less than 10 goods carriages at any time during the previous year. they’ll even be those who are engaged in the business of leasing or plying of such goods carriages.

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Who Is Eligible Under Section 44AE? 

The following persons are eligible 

1. A Individual. 

2. Hindu Undivided Family. 

3. Firm. 

4. Company. 

A person who is engaged in the business of plying, hiring or leasing goods carriages will adopt this scheme. they have to not own quite 10 goods vehicles at any time during the year. 

1. A part of the month is calculated as a full or whole month. 

2. If the income is on top of the presumptive rate of Rs.1000 (Heavy Vehicles) / Rs.7500 (Other than heavy vehicles), then such income is declared. 

3. Heavy goods vehicles are those vehicles that weigh quite 12 thousand Kilograms. 

Who Is Not Eligible For Presumptive Taxation Scheme Under Section 44AE?

The one who holds quite ten goods vehicles at any time during the year isn’t eligible and can’t benefit from this scheme. 

Calculate presumptive taxation under Section 44AE. 

If someone is willing to choose the presumptive taxation scheme of Section 44AE, the income is computed on an estimated basis. 

How tax is calculated on a significant goods vehicle?

Tax is calculated at the speed of Rs 1000 / ton of total vehicle weight for each month or a part of the month during which the vehicle is owned by taxpayers. 

How Tax Is Calculated On Vehicles Aside From Heavy Goods Vehicles?

Income is going to be calculated at the speed of Rs 7500 for each month or a part of the month during which the product’s vehicles are owned by the taxpayer. 

Note: A part of the month is calculated or determined as a full month. 

If the income is over the presumptive rate of Rs.1000 (Heavy Vehicles) / Rs.7500 (Other than heavy vehicles), then such income will be declared. 

Heavy goods vehicles are those vehicles that weigh over 12 thousand Kilograms. 

Can taxpayers claim deductions as per Section 44AE?

In the case of someone choosing the presumptive taxation scheme of Section 44AE, the provisions of deductions won’t apply and income is calculated at a presumptive rate. 

For partnership firms: the owners can claim deduction on 2 bases. They are the account of remuneration and Interest paid to partners. 

No separate deduction is allowed on the account of depreciation. However, the written down value (WDV) of any asset employed in such business shall be claimed and has been actually allowed.

Maintaining books of accounts: 

A person engaged in business/profession needs to maintain books of accounts of his business as per section 44AA.

But, if someone declares income at a presumptive rate, then the supply regarding the upkeep of books of account won’t apply. 

1. The business owners needn’t maintain books of accounts under Section 44AA. The business owners needn’t audit their accounts under Section 44AB. 

2. If an individual opts for presumptive tax under Section 44AE, then they’re at risk of paying advance tax from the business covered under Section 44AE. 

3. And, if someone declares income at a lower rate than the prescribed one, then they have to take care of books of accounts. They audit as per Section 44AA and Section 44AB respectively.

4. Other Provisions of Section 44AE. There are cases where the haulers don’t own a vehicle for an entire month. they may only own it for a selected time.