Presumptive income under section 44AE in case of goods carriage

Section 44AE, inter alia provides that, the profits and gains shall be deemed to be an amount equal to seven thousand five hundred rupees per month or part of a month for each goods carriage or the amount claimed to be actually earned by the assessee, whichever is higher.

The current presumptive income scheme is applicable uniformly to all classes of goods carriages irrespective of their tonnage capacity. The only condition which needs to be fulfilled is that the assessee should not have owned more than 10 goods carriages at any time during the previous year.

Accordingly, the transporters who owns (less than 10) large capacity/ size goods carriages are also availing the benefit of section 44AE. It is necessary to mention here that the legislative intent of introducing this provision was to give benefit to small transporters in order to reduce their compliance burden. Even though the profit margins of large capacity goods carriages are higher than small capacity goods carriages, the tax consequences are similar which is against the principle of tax equity.

In view of the above, it is proposed to amend the section 44AE of the Act to provide that, in the case of heavy goods vehicle (more than 12MT gross vehicle weight), the income would deemed to be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, per month or part of a month for each goods vehicle or the amount claimed to be actually earned by the assessee, whichever is higher. The vehicles other than heavy goods vehicle will continue to be taxed as per the existing rates.

These amendments will take effect 1st April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent assessment years.

Extract of Clause 16 of Finance Bill 2018

Clause 16 of the Bill seeks to amend section 44AE of the Income-tax Act relating to special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.

Sub-section (2) of the said section, inter alia, provides that for the purpose of computing profits and gains of business of plying, hiring or leasing goods carriages an amount equal to seven thousand five hundred rupees for every month or part of a month or an amount claimed to be actually earned by the assessee, whichever is higher, shall be deemed to be the aggregate income.

It is proposed to substitute the said sub-section so as to provide that for a heavy goods vehicle, the profits and gains shall be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher.

It is further proposed to provide that in the case of a goods carriage other than heavy vehicle, the profits and gains shall be an amount equal to seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.

It is also proposed to define the expressions “goods carriage”, “gross vehicle weight”, “heavy goods vehicle”and”unladen weight” in the said section.

These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.

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16 Comments

  1. shantilal jain says:

    please give your comments after clearification on 14-8-2019 to AIMTA, what will be the income U/s 44AE if vehicle weight exceeds 12M.T and load capacity 30 M.T.

  2. RAJESH KHANNA says:

    Under section 44ae for ay 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000kg.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month

  3. Ashok Juneja says:

    Now return is due to be filed by this month bt the answer of the query raised by several persons ref 44AE weather income calculate on unladen weight ie 9000 kg or 25000 kg on gross weight

    1. Bharat Bhushan says:

      s per section 2(15) of the Motor Vehicles Act, 1988 “gross vehicle weight’’ means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle Under section 44 AE for A Y 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000 KG.
      Pl confirm whether income shall be ₹25000 or ₹9000 per month we are confused for gross weight or unladen weight

      1. Manjunath says:

        Its sad to know authors despite giving confusing opinion are not bothered to clarify the air. However i would like to point out that in the article author has made the mistake of using Unladen Weight which is not correct. GVW should be used for the calculation. Even WINMAN too has made the same confusing mistake. Answer for above queries is 25000 per month per vehicle

  4. surendra kumar says:

    As per section 2(15) of the Motor Vehicles Act, 1988, Gross Vehicle weight or unladen weight is used as same. Whereas in Motor Vehicles Act, there should be clear the unladen or gross vehicle weight. So, first of all differentiate or correct in Motor Vehicles Act

  5. Ca Basavaraj Patil says:

    As per section 2(15) of the Motor Vehicles Act, 1988 “gross vehicle weight’’ means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle Under section 44 AE for A Y 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000 KG.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month
    Request the clarification

  6. ATUL says:

    As per section 2(15) of the Motor Vehicles Act, 1988 “gross vehicle weight’’ means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle Under section 44 AE for A Y 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000 KG.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month

  7. RANISH NEMA says:

    Goods Carriage: As per section 2(14) of the Motor Vehicles Act, 1988 “goods carriage’’ means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.

    Gross Vehicle Weight: As per section 2(15) of the Motor Vehicles Act, 1988 “gross vehicle weight’’ means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle.
    Unladen Weight: As per section 2(15) of the Motor Vehicles Act, 1988 “unladen weight’’ means the weight of a vehicle or trailer including all equipment ordinarily used with the vehicle or trailer when working, but excluding the weight of a driver or attendant; and where alternative parts or bodies are used the unladen weight of the vehicle means the weight of the vehicle weight the heaviest such alternative part or body.
    Under section 44AE for AY 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000kg.

    Pl confirm whether income shall be ₹25000 or ₹9000 per month

  8. RANISH NEMA says:

    As per section 2(15) of the Motor Vehicles Act, 1988 “gross vehicle weight’’ means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle Under section 44 AE for A Y 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000 KG.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month

  9. LILADHAR POPAT says:

    Under section 44ae for ay 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000kg.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month

  10. R. S. KALRA says:

    Under section 44ae for ay 2019-20, it is mentioned ₹1000/- per ton per month on gross vehicle weight or unladen weight. Heavy goods vehicle gross weight is 25000 kg and unladen weight is 9000kg.
    Pl confirm whether income shall be ₹25000 or ₹9000 per month

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