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What is Section 44AE of The Income Tax Act, 1961?

The Income-Tax Act has introduced the presumptive taxation scheme under sections 44AD, 44ADA, and 44AE to provide relief to the small and medium taxpayers from tedious task of maintaining books of account and having the accounts audited. Section 44AE of the Income Tax Act of 1961 is introduced to provide relief to small assessees engaged in the business of goods carriage. The goal is to simplify tax compliances, relieve the burden of maintaining books of accounts, and give a common income calculation technique. Assesses who choose this presumptive taxation plan are not required to keep books of accounts or have them audited.

How is Presumptive Income Computed under Section 44AE?

The income under section 44AE will be computed on an estimated basis. Two types of goods carriage vehicles are there, and they are heavy goods vehicles and light goods trucks. Profits and gains from each shipment of products shall be computed in accordance with the following conditions on an estimate basis:

1. Heavy goods vehicles

A sum equivalent to Rs 1000 per tonne of gross vehicle weight or unladen weight for each month or part of a month in the preceding year when the assessee possessed the heavy goods vehicle.


The actual amount earned by the assessee from such heavy goods truck during the fiscal year

Whichever is higher.

2. Other than heavy goods vehicles

In case of vehicles other than heavy goods vehicles, the income will be calculated at a payment of Rs 7500 for each month or part of a month in which the assessee owned the carriage of the goods.

Benefits of Using Presumptive Income Under Section 44AE Calculator

If you're looking for a big break from the paperwork that comes with calculating income tax after availing all the deductions and exemptions, then this calculator can help you greatly. All you need to do is enter your details, and this calculator will help you calculate the presumptive income under section 44AE.

Eligibility Criteria for Using Presumptive Income Under Section 44AE Calculator

The Presumptive Taxation Scheme can opt when the assessee is engaged in the business of plying, hiring, or leasing goods carriages, and also the assessee should not own more than 10 goods vehicles at any time during the previous year. As a result, there are just two key eligibility criteria:

  • Adopted by the assessee who is engaged in hiring, plying, and leasing goods conveyance, and if an assessee is selling passenger automobiles or providing passenger transportation,.then such an assessee cannot adopt these provisions
  • It also applies to businesses with a maximum of 10 goods vehicles. It follows that an assessee who owns more than ten. goods vehicles during the year, such assessee cannot adopt these provisions.

Example on Presumptive Income Computed under Section 44AE

Let's illustrate the concept of presumptive income computed under Section 44AE of the Income Tax Act with a hypothetical scenario:


Mr. Raj is a small business owner who operates a transport service. He owns a fleet of three trucks used for the transportation of goods. Mr. Raj wants to determine his taxable income for the financial year 2023-2024 using the presumptive income scheme provided under Section 44AE.

Key Information:
  • Mr. Raj owns three trucks used for the transport of goods.
  • Each of his trucks has a gross vehicle weight (GVW) of 10,000 kilograms.
Computation of Presumptive Income:

Under Section 44AE, the presumptive income scheme for owners of goods carriages is based on the number of trucks owned and the gross vehicle weight (GVW) of those trucks. The scheme assumes a minimum income per truck per month, regardless of the actual income earned.

As of the financial year 2023-2024, the presumptive income per month per truck is Rs. 7,500.

Step 1: Determine the Presumptive Income per Month per Truck

Presumptive Income per Month per Truck = Rs. 7,500 (as per Section 44AE)

Step 2: Calculate Total Presumptive Income

Since Mr. Raj owns three trucks, his total presumptive income for the financial year would be calculated as follows:

Total Presumptive Income = (Presumptive Income per Month per Truck) x (Number of Trucks) x (Number of Months in the Financial Year)
Total Presumptive Income = Rs. 7,500 x 3 x 12 (assuming a 12-month financial year)
Total Presumptive Income = Rs. 2,70,000

Step 3: Tax Calculation

Mr. Raj's taxable income for the financial year 2023-2024, as per Section 44AE, is Rs. 2,70,000. He will need to pay tax on this amount, and he won't be required to maintain detailed books of accounts or get his accounts audited under Section 44AB if his income is calculated under Section 44AE.



Is Tax2win Presumptive Income Under Section 44AE calculator safe?

Yes, it is totally safe to use Presumptive Income Under Section 44AE Calculator of Tax2win.


Can an assessee covered by section 44AE declare lower income than the income specified in section 44AE?

If the assessee discloses a lesser income, the exemption from maintenance of accounts is not available, and he is required to maintain books of account and have such books of account audited in accordance with section 44AB.


Is Section 44E a compulsory scheme for any assessee?

No, it is totally dependent on the taxpayers' choice. Section 44AE offers benefits like simplified taxation, relief from maintenance, and audit of books of accounts. However, opting for this scheme may disallow you from all the deductions from section 30 to section 38. Hence, proper planning is required before opting for the Section 44AE scheme.


What is the threshold of vehicles beyond which a person cannot opt for the presumptive taxation scheme under section 44AE?

The eligibility criteria for a presumptive tax scheme is that a person must be running a business of plying, hiring, or leasing goods vehicles and does not hold more than 10 carriage vehicles at any time during the financial year.

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