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Calculation Under Section 44AE under Presumptive Taxation

Calculation Under Section 44AE under Presumptive Taxation 

Section 44AE of Income Tax Act provides the Presumptive Scheme for the business of plying, hiring or leasing of goods carriages. The person should not own more than the 10 goods carriage vehicle in the previous year. The calculation for such income is also not easy to be done. Because if the assessing officer does not satisfied with the calculation it may still lead to the litigation. 

So, be careful and understand the Act properly. Let’s, discuss the calculation for such business with the help of some examples.

Example 1:

The A ltd. has 15 goods carriage vehicles. Is he eligible to file the return under section 44AE under Presumptive taxation scheme? 

Answer:

No, A ltd. can not file the return under section 44AE under presumptive taxation scheme.

Example 2:

X ltd. has 8 goods carriage vehicles weighing 11500 Kg. each. Calculate the taxable income for X ltd.

Answer:
Particular Amount
Income per Vehicle per month 7,500
No. of Vehicles 8
Income per Month 60,000
No. of Months 12
Taxable Income for X ltd. 7,20,000

 

The gross weight of the vehicle does not cross the prescribed limit. So, the income will be calculated on the basis of 7,500/vehicle per month.

Example 3:

ABC Ltd. is a Goods Carriage company, which has 8 Vehicles. The weight of the vehicle is as follows:

  • 5 Vehicle = 2000 kg(Vehicle Weight) + 11000 kg(Capacity)
  • 3 Vehicle = 1500 kg(Vehicle Weight) + 8500 kg(Capacity)

Calculate the Income of ABC Ltd.

Answer: 

There are two kinds of the vehicle in this case. One is normal Goods Carriage Vehicle and another one is a Heavy Goods Carriage Vehicle. The difference between both types of the vehicles is the gross weight prescribed under the Act.

So, let us first calculate the income from the normal Goods Carriage Vehicles:

Particular Amount
Income per Vehicle per month 7,500
No. of Vehicles 3
Income per Month 22,500
No. of Months 12
Taxable Income for X ltd. 2,70,000

 

Now, let us calculate the income from Heavy Goods Carriage Vehicles:

Particular Amount
Income per Ton 1,000
Weight (In Tons) per vehicle 13
Income per Vehicle 13,000
No. of Vehicle 5
Income in the Month 65,000
No. of Months 12
Income in the Year 7,80,000

 

So, be careful while calculating the income under the Presumptive Taxation Scheme and file the Return Properly.

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Profile photo of Neeraj Rohilla Neeraj Rohilla

New Delhi, India

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