SPECIAL PROVISIONS FOR COMPUTING PROFITS AND GAINS OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES [SECTION 44AE]

1. Eligible Business: – Section provides for estimating business income of an owner of goods carriages from the plying, hire or leasing of such goods carriages;

2. Eligible Assesse: – Scheme applies to persons owning not more than 10 goods vehicles at any time during the previous year;

3. Presumptive Income: – Estimated income from each goods vehicle, being a heavy goods vehicle[1] or other than heavy goods vehicle would be-

Section 44AE - Presumptive Income Provisions for Transporters

The assesse can also declare a higher amount in his return of income. In such case, the latter will be considered to be his income;

4. 44AE with regards to Allowances:-

(i) Assesse will be deemed to have been allowed the deductions under sections 30 to 38.

(ii) Accordingly, the written down value of any asset used for the purpose of the business of the assesse will be deemed to have been calculated as if the assesse had claimed and had actually been allowed the deduction in respect of depreciation for each of the relevant assessment years.

5. Salary and interest to partners is allowed: – Where the assesse is a firm, the salary and interest paid to its partner are allowed to be deducted subject to the conditions and limit specified under section 40(b) [which is not allowed in presumptive scheme like 44AD and 44ADA].

6. Relaxation with regards to maintenance of Books of Accounts and get the Accounts audited:- Assesse joining the scheme will not be required to maintain books of account  under  section 44AA and get the accounts audited under section 44AB in respect of such income.

7. Option to claim lower profits: – An assesse may claim lower profits and gains than the deemed profits and gains specified in sub-section (1) subject to the condition that the books of account and other documents are kept and maintained as required under section 44AA (2) and the assesse gets his accounts audited and furnishes a report of such audit as required under section 44AB.

8. ITR Form Specified:– Form ITR-4 would be applicable for income disclosed under this section.

9. Other Provisions:

(i) If the transporter furnishes his PAN card to the recipient of service, then NO TDS is required to be deducted on the amount paid to transporter.

(ii) Expenditure incurred (which is otherwise deductible under the other provisions of the act for computation of income from business and profession) and payment made to a person in a day exceeds Rs. 10,000/- (Rs. 35,000/- in the case of payment for plying, hiring or leasing of goods carriage) otherwise than by an account payee cheque/draft/use of electronic clearing system through a bank account, such expenses are not allowable as deduction under Section 40A(3) in computation of income from business and profession.

[1] Any goods carriage, the gross vehicle weight of which exceeds 12,000 kg’s.

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