SECTION 44AE PRESUMPTIVE TAXATION – INCOME TAX ACT, 1961
The provisions of section 44AE of Income Tax Act 1961 prescribes procedure for computing business profits under presumptive basis for small taxpayers engaged in the business of plying, hiring and leasing of goods carriage. SECTION 44AE PRESUMPTIVE TAXATION
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Person eligible to opt for section 44AE presumptive taxation
The following is list of persons eligible to opt for section 44AE presumptive taxation
- Individuals
- HUF
- Partnership Firms
- LLP – Limited Liability Partnership
- Company
A person who owns more than 10 goods vehicles cannot adopt the presumptive taxation scheme of section 44AE
Section 44AE applies to a person having not more than 10 goods carriage at any time during the previous year.
Definition of Owner of good carriage under section 44AE
For the purpose of section 44AE, owner of the goods carriage cover an assessee is in possession of a goods carriage whether taken on hire purchase or on instalments.
The presumptive income computed at the rate of Rs. 1,000 per ton or Rs. 7,500 per goods vehicle per month is the final income and no further expenses will be allowed or disallowed
For heavy hoods vehicle, income will be computed at the rate of Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by taxpayer.
In case of vehicle other than heavy goods vehicle, income will be computed at the rate of 7,500 for every month or part of a month during which the goods carriage is owned by taxpayer. Part of the month would be considered as full month.
No need to maintain books of account as prescribed under section 44AA
The owner of goods carriage is not required to maintain books of accounts under the provision of section 44AA in respect of income from goods carriage business.
No need to audit account as prescribed under section 44AB
The owner of goods carriage is not required to get their accounts audited under the provision of section 44AB in respect of income from goods carriage business.
Applicability of the provisions relating to payment of advance tax
There is no concession as regards payment of advance tax. Hence, the owner of goods carriage opting presumptive taxation scheme under section 44AE will be liable to pay advance tax as per prescribed timeliness and amount.
Consequences if a person does not opt for the presumptive taxation scheme under section 44AE and declares income at a lower rate, i.e., at less than Rs. 1,000 per ton or Rs. 7,500 per goods vehicle per month
The owner of goods carriage will be required to maintain books of accounts under the provision of section 44AA. Further, owner of goods carriage will be required to get their accounts audited under the provision of section 44AB.
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