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Income Tax · BusinessSection 44AE for transport businesses: presumptive income examples
Truck owners with ten or fewer goods vehicles can pay tax on a fixed income per vehicle per month under Section 44AE – no books, no audit. Here is how the per-ton and per-vehicle rates work, with examples for transporters in Delhi NCR.
Section 44AE of the 1961 Act – part of Section 58 of the Income-tax Act, 2025 – applies to the business of plying, hiring or leasing goods carriages. Income is deemed per vehicle per month, regardless of actual freight or expenses.
Eligibility
- Any person – individual, HUF, firm, LLP or company.
- Owns not more than ten goods carriages at any time during the year (vehicles taken on hire purchase or instalments count as owned).
- Business of plying, hiring or leasing goods carriages.
Presumptive income
| Vehicle | Income per month or part of a month |
|---|---|
| Heavy goods vehicle (gross vehicle weight > 12,000 kg) | ₹1,000 per ton of gross vehicle weight or unladen weight |
| Other goods vehicles | ₹7,500 per vehicle |
A part of a month counts as a full month. You can declare higher income if actual income is higher.
Deductions
- All expenses, including depreciation, are deemed allowed.
- A partnership firm under 44AE can still deduct partners' remuneration and interest within Section 40(b) limits (unlike 44AD).
- WDV of vehicles is computed as if depreciation was claimed.
Worked example 1: proprietor with mixed fleet
Example: Jaspal Singh of Bawana owns, throughout FY 2025-26:
- 3 heavy trucks, each with gross vehicle weight 25 tons;
- 2 light commercial vehicles (LCVs).
He buys one more 25-ton truck on 10 October 2025.
| Vehicle | Months | Rate | Income |
|---|---|---|---|
| 3 heavy trucks | 12 | ₹1,000 × 25 tons × 12 | ₹9,00,000 |
| 4th heavy truck (Oct–Mar) | 6 | ₹1,000 × 25 × 6 | ₹1,50,000 |
| 2 LCVs | 12 | ₹7,500 × 12 × 2 | ₹1,80,000 |
| Total presumptive income | ₹12,30,000 |
He owns 6 vehicles at most – within ten. No books or audit are required if he declares at least ₹12,30,000. Under the new regime, his tax (with no other income) on ₹12,30,000: slab tax ₹64,500, but marginal relief limits it to ₹30,000 + cess = ₹31,200.
Worked example 2: transport firm
Example: A partnership firm in Narela owns 8 heavy trucks of 16 tons each for the whole year. Presumptive income = 8 × 16 × ₹1,000 × 12 = ₹15,36,000. If the deed allows, the firm can deduct working partners' remuneration within 40(b) limits and interest on capital up to 12%, before tax at 30%.
What if you own more than ten vehicles?
If the fleet exceeds ten at any time in the year, 44AE is not available for that year. Books must be maintained and a tax audit is needed if turnover exceeds ₹1 crore (or ₹10 crore with ≤5% cash), or the firm can consider 44AD only if it is not a goods carriage business – which it is not. Plan purchases and sales of vehicles around this limit.
TDS and cash rules for transporters
- TDS: payers do not deduct contractor TDS if the transporter gives a declaration of owning ten or fewer vehicles with PAN. Keep copies of declarations given.
- Cash payments by the transporter: for payments to other transporters for hiring vehicles, the cash limit under Section 40A(3) is ₹35,000 per day (not ₹10,000) – but this matters only if computing actual profit.
- GST: goods transport agencies (GTA) supplying to registered businesses usually operate under reverse charge (5%) or forward charge (5% without ITC / 18% with ITC) options. Individual truck owners hiring vehicles to a GTA are generally exempt.
ITR form
ITR-4 for individuals, HUFs and firms (not LLPs) with total income ≤ ₹50 lakh; otherwise ITR-3/ITR-5/ITR-6.
Under the 2025 Act
Section 58 of the Income-tax Act, 2025 carries the same per-ton and per-vehicle rates. Advance tax and other compliance follow the new Act from Tax Year 2026-27.
Common mistakes
- Counting vehicles at year-end instead of "at any time".
- Treating a part month as a fraction – it is a full month.
- Ignoring hire-purchase vehicles in the count.
- Not filing ITR with vehicle registration numbers and weights.
Key takeaway
Section 44AE is simple and usually favourable for small fleet owners: ₹1,000 per ton per month for heavy trucks and ₹7,500 for others. Track the ten-vehicle ceiling. Our practice works with transport businesses on accounts, presumptive taxation and audits.
Official references
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
Who can use Section 44AE?
Any person (individual, HUF, firm, company) engaged in plying, hiring or leasing goods carriages who does not own more than ten goods carriages at any time during the year.
What is the presumptive income for a heavy goods vehicle?
₹1,000 per ton of gross vehicle weight (or unladen weight) per month or part of a month, for vehicles above 12,000 kg gross vehicle weight.
What is the presumptive income for smaller goods vehicles?
₹7,500 per vehicle per month or part of a month.
Do transporters under 44AE suffer TDS?
A transporter owning ten or fewer goods carriages can give a declaration with PAN to the payer, who then does not deduct TDS under the contractor provision.
Can a company use 44AE?
Yes. Section 44AE applies to any person, including companies, owning not more than ten goods carriages at any time in the year.
What is 'gross vehicle weight' for heavy vehicles?
The total permissible weight of the vehicle and its load as certified by the registering authority – shown on the registration certificate.
Can a transporter under 44AE claim the 6% rate under 44AD instead?
No. Business of plying, hiring or leasing goods carriages is excluded from 44AD; 44AE or regular books apply.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
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