Section 44 AE of Income Tax Act: Rs.7500/- per vehicle for transporters

section 44 ae transport business
section 44 ae transport business

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1. Applicability

a) This section applies to a person who owns less than 10 goods carriage during the previous year.

b) For this purpose, an assessee who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which whole or any part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.

c) “Goods Carriage” means any motor vehicle constructed or adapted for used solely for the carriage of goods or any motor vehicle not so constructed or adapted when used for the carriage of goods.

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2. Presumptive Income

Profits or gains from each goods carriage shall be higher of -

  • Rs.7500/- for each month or part of a month for which a goods carriage is owned by the assessee. or
  • An amount claimed to be actually earned from the vehicle.

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3. Consequences of declaring a Lower Income

If the assesse declares a lower income than the deemed profits and gains under section 44AD, following consequences shall apply -

  • Taxpayer will have to maintain books of accounts under section 44AA.
  • Taxpayer will have to get his accounts audited under section 44AB.

Both the consequences shall apply irrespective of the turnover or gross receipts of the assesse provided his income exceeds the exemption limit.

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4. Other Points

a) All the deductions under sections 30 to 38 including depreciation and unabsorbed depreciation shall be deemed to have been provided and no further deduction will be allowed under these sections. WDV shall be calculated in books as if depreciation has been allowed.

b) An assesse opting for this scheme is exempted from payment of advance tax related to such business.

c) An assesse opting for this scheme is exempted from maintenance of books and accounts under section 44AA.

d) In case of a partnership firm, deduction of salary and interest to partners under section 40(b) is allowed.

e) Deductions under sections 80C to 80U and rebate under section 88E will be available to assessee if the conditions therein are fulfilled.

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5. Click here to see the provisions of bare act.

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Recommended Read – Section 44AD: Income from any business presumed @ 8%

 

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