Presumptive scheme of taxation for Transporter: Confusion& Clarification
Maintenance of books of accounts, bills and voucher is a cumbersome process for small taxpayers. To provide ease of doing business, Income Tax Act have presumptive scheme of taxation for small taxpayers which provides them relief from requirements of maintaining the books of accounts. One such scheme is available u/s 44AE of the Income Tax Act – 1961 which is available to the persons who are engaged in the business of plying, hiring or leasing of goods carriages. Key features of the schemes are as under
- Benefit of section 44AE is available to all the categories of taxpayers, be it individual, HUF, firm, company, etc., who are engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year. Person opting for section 44AE would not be required to get the books of accounts audited even if turnover exceeds the limit of Rs. 1 Cr or 2 Cr.
- Section 44AE operates on the basis of “ownership” and not on the basis of “usage”. Even if the truck is not put to use, still income has to be offered u/s 44AE. Taxpayer who has taken the vehicle on lease cannot opt for presumptive scheme of taxation u/s 44AE.
- Minimum Income to be offered for taxation u/s 44AE:
a] For Heavy Goods Vehicle, minimum income to be offered for taxation is @ Rs. 1,000/- per ton of gross vehicle weight (or unladen weight) for every month or part of a month during which the heavy goods vehicle is owned by taxpayer. In case of vehicles other than heavy goods vehicle, minimum income to be offered for taxation is @ 7,500/- for every month or part of a month of ownership. It may be noted that (i) Part of the month would be considered as full month for section 44AE (ii) Heavy Goods vehicle means any goods carriage, the gross vehicle weight of which exceeds 12,000 Kg.
The taxpayer may disclose income higher than the amount specified above. However, if the taxpayers discloses income lower than the specified income as referred above then they would be required to not only maintain regular books of account u/s 44AA but has to get them audited also u/s 44AB.
- The presumptive income computed above is the final income and no further expenses will be allowed or disallowed. Separate deduction towards other business expenses like salary, depreciation etc will not admissible. Written down value of any asset used in such business shall be calculated as if depreciation u/s 32 is claimed and has been actually allowed. However, taxpayers can claim deduction under chapter VI-A like deduction u/s 80C, 80D etc. No disallowance can be made u/s 40, 40A, 43B etc for the taxpayers who have opted section 44AE.
- Where the assessee is a partnership firm, the remuneration & interest on capital to the partners can further be claimed as deduction subject to conditions & limit specified u/s 40(b). In case of presumptive scheme of taxation u/s 44AD, deduction towards interest & remuneration to partners is not available. However, it is not so in section 44AE.
- There is no concession as regards payment of advance tax & taxpayers covered by section 44AE will be liable to pay advance tax. [Benefit of payment of advance tax in one installment by 15th March is available only to taxpayers covered by section 44AD & 44ADA]
- Section 44AE uses the words “Gross Vehicle Weight or Unladen Weight, as the case may be”. Registration certificate/ Smart card of the vehicle mentions both i.e., Gross Vehicle Weight as well as unladen Weight. Question arises as to which weight is required to be considered for section 44AE computation. CBDT in response to the clarification sought by All India Motor Transport Congress has expressed the following view vide F.No.225/233/2019/ITA-II Dated 14.08.2019 which in short conveys as under:
“i. In respect of a heavy goods vehicle, the profits and gains from each goods carriage shall be at the rate of Rs. 1,000/- per ton of gross vehicle weight for every month or part of the month.
ii. In respect of a tractor or a road-roller (where the gross vehicle weight is not applicable), if unladen weight exceeds 12,000 Kg, the profits and gains from each goods carriage for the purposes of section 44AE of the Act shall be at the rate of Rs. 1000/- per ton of unladen weight for every month or part of the month”.
- Taxpayers have option to opt or not to opt the benefit available under section 44AE in entirety. They cannot opt for few trucks on presumptive basis u/s 44AE and few on actual basis.