If you own a few trucks or tempos and earn from moving goods, the Income Tax Act gives you a simpler way to work out your tax. You do not have to keep full books of account, add up every fuel bill, or work out depreciation. You declare a fixed income for each vehicle you own, and that is your taxable business income.
Section 44AE of the Income Tax Act lets a person in the business of plying, hiring or leasing goods carriages declare a fixed income per vehicle instead of keeping detailed books. A heavy goods vehicle counts at Rs 1,000 per ton of gross weight per month, and any other goods carriage at Rs 7,500 per vehicle per month. The scheme applies only if you own no more than 10 goods carriages at any time during the year.
What Is Section 44AE?
Section 44AE is a presumptive taxation scheme. It applies to people who ply, hire or lease goods carriages — that is, they run trucks or tempos to carry goods for payment, or they give their goods vehicles on hire or lease.
Instead of working out profit from receipts minus expenses, the owner declares a fixed amount per vehicle. The amount is set by the law, so there is no argument with the assessing officer about how much profit the business made. The trade-off is simple: you save the work of keeping books, but you also give up the right to claim your actual expenses.
From Tax Year 2026-27 (income from 1 April 2026), the Income-tax Act, 2025 is in force. Sections 44AD, 44ADA and 44AE are now merged into one section — Section 58 of the 2025 Act. Section 44AE is Table 2 of Section 58. The rates and the 10-vehicle limit are the same as before.
For Assessment Year 2026-27 (income of FY 2025-26) the 1961 Act still applies. So for the return you file now, you still refer to “Section 44AE”. For income from 1 April 2026 onwards, the same rules sit in Section 58, Table 2.
Who Can Use Section 44AE?
You can use the scheme only if all of these conditions are met:
- You are in the business of plying, hiring or leasing goods carriages.
- You do not own more than 10 goods carriages at any time during the previous year.
- Vehicles bought on hire-purchase or instalment count as owned.
- The scheme is not for passenger buses or taxis — only goods carriages.
In practice, the scheme is used by individuals, Hindu Undivided Families (HUFs) and partnership firms, who file ITR-4 (Sugam). LLPs file ITR-5 and companies file ITR-6, so they do not take the ITR-4 route.
How the 10-vehicle limit works
The limit is tested at any time during the year, not at year-end. If you own 10 trucks for 11 months and buy an 11th truck for even one day, you lose the scheme for the whole year. If you sell a truck mid-year and your count never goes above 10, you stay eligible — but you still declare presumptive income for every month (or part of a month) you owned each vehicle.
A goods carriage means a vehicle built to carry goods. A tempo, a mini-truck, a truck and a trailer all count. A bus that carries passengers does not count, even if it is run on a commercial permit.
How Is Income Calculated Under Section 44AE?
The law gives two rates. You work out the income vehicle by vehicle, then add the amounts up.
| Type of vehicle | Presumptive income |
|---|---|
| Heavy goods vehicle | Rs 1,000 per ton of gross vehicle weight (or unladen weight, as applicable) per month or part of a month |
| Any other goods carriage | Rs 7,500 per vehicle per month or part of a month |
Two rules sit on top of the table:
- Whichever is higher. For each vehicle, you must show the prescribed amount or the amount you actually earned from that vehicle, whichever is higher. If a truck earned more than the fixed rate, you declare the higher figure.
- Part of a month counts as a full month. If you buy a truck on 28 March, March counts as a full month for that truck.
A heavy goods vehicle is a goods carriage whose gross vehicle weight is more than 12,000 kg. Anything at or below that weight is an “other goods carriage” and takes the flat Rs 7,500 rate.
Worked Examples
Example 1 — Only light vehicles
You own 7 tempos for the whole year.
7 vehicles × Rs 7,500 × 12 months = Rs 6,30,000 presumptive income.
Example 2 — One heavy truck
You own one heavy truck with a gross vehicle weight of 16 tons for the whole year.
16 tons × Rs 1,000 × 12 months = Rs 1,92,000 presumptive income.
Example 3 — Mixed fleet
You own 3 light vehicles for 12 months and 2 heavy trucks of 14 tons each for 9 months.
- Light vehicles: 3 × Rs 7,500 × 12 = Rs 2,70,000
- Heavy trucks: 2 × 14 tons × Rs 1,000 × 9 months = Rs 2,52,000
Total presumptive income = Rs 5,22,000.
Note how the heavy-truck rate works: it is Rs 1,000 per ton, so a 14-ton truck gives Rs 14,000 a month, while a 25-ton truck gives Rs 25,000 a month. The bigger the truck, the higher the fixed income.
What Tax Will You Actually Pay?
Take Example 1: presumptive income of Rs 6,30,000. What tax does that mean?
New tax regime
The new-regime slabs for FY 2025-26 are 0% up to Rs 4 lakh, then 5% from Rs 4 lakh to Rs 8 lakh.
- Taxable amount above Rs 4 lakh: Rs 6,30,000 − Rs 4,00,000 = Rs 2,30,000
- Tax at 5%: Rs 11,500
Section 87A of the 1961 Act gives a rebate for total income up to Rs 12 lakh (Section 156 of the 2025 Act carries the same rebate). Since Rs 6,30,000 is below that limit, the rebate covers the full Rs 11,500. Effective tax: nil.
Old tax regime
The old regime is still available as an option. Its slabs are 0% up to Rs 2.5 lakh, 5% from Rs 2.5 lakh to Rs 5 lakh, and 20% from Rs 5 lakh to Rs 10 lakh.
- 5% on Rs 2,50,000 = Rs 12,500
- 20% on Rs 1,30,000 = Rs 26,000
- Total: Rs 38,500, plus 4% health and education cess = Rs 40,040
The old-regime 87A rebate applies only up to Rs 5 lakh of income, so it does not help here. The same Rs 6,30,000 costs about Rs 40,000 under the old regime and nil under the new regime — which is why most small transporters now check the new tax regime slabs for FY 2026-27 before choosing.
What You Cannot Claim
When you use Section 44AE, the presumptive amount is your taxable income from the business. You cannot claim:
- Fuel, repairs, insurance, salaries or drivers’ wages
- Depreciation on the vehicles
- Any other deduction under Sections 30 to 38 of the Act
Depreciation is treated as already built into the fixed rates, so you cannot claim it separately. Partnership firms are the one exception: they may still deduct partner salary and interest, within the limits the Act allows.
One related rule helps transporters: cash payments of up to Rs 35,000 are allowed as business expense for transporters, while the cash-payment limit for other businesses is Rs 10,000. This is the Section 40A(3) limit, and it recognises that transporters often pay in cash on long routes.
Can you declare a lower income?
Yes, but only if you give up the scheme for that year. If your actual income is lower than the presumptive amount, you may declare the lower figure — but then you must maintain proper books of account and get them audited. Most small owners do not take this route, because the audit costs more than the tax saved. The lower-income route makes sense only when the gap between actual and presumptive income is large.
Advance Tax and ITR Filing
Section 44AE does not get the single-payment concession that Sections 44AD and 44ADA get. Those two schemes let you pay all your advance tax in one go by 15 March. A transporter under 44AE follows the normal four-instalment schedule:
| Due date | Cumulative % of total advance tax |
|---|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
Advance tax applies when your net tax payable after TDS and TCS is Rs 10,000 or more. Miss an instalment and interest applies under the advance-tax interest rules — the December instalment and the 75% rule explain how the interest is worked out.
Note: under the Income-tax Act, 2025, Section 408(2) gives Section 58 presumptive taxpayers a single-instalment option, but guides disagree on whether it covers the goods-carriage table. Until that is settled, transporters should follow the four-instalment schedule and confirm the current position on the e-filing portal.
The correct return form is ITR-4 (Sugam).
- Individuals and HUFs: file by 31 July.
- Partnership firms: file by 30 September.
The department sometimes extends these dates, so check the current year’s notification on the e-filing portal before you file.
Section 44AE vs 44AD vs 44ADA
| Feature | Section 44AE | Section 44AD | Section 44ADA |
|---|---|---|---|
| Who it is for | Goods-carriage owners (max 10 vehicles) | Small businesses | Specified professionals (doctors, lawyers, consultants) |
| Basis of income | Fixed amount per vehicle | 8% of turnover (6% for digital receipts) | 50% of gross receipts |
| Limit | 10 goods carriages | Turnover up to Rs 2 crore (Rs 3 crore if cash receipts are 5% or less) | Gross receipts up to Rs 50 lakh (Rs 75 lakh if 95% or more is digital) |
| Form to file | ITR-4 | ITR-4 | ITR-4 |
| Advance tax | Four instalments | Single payment by 15 March | Single payment by 15 March |
The key point: a goods-carriage business is not covered by 44AD. The Act keeps transporters out of 44AD on purpose and gives them 44AE instead. If you run trucks, 44AE is your section — do not apply the 8% turnover rate to a transport business.
Common Mistakes to Avoid
- Owning an 11th vehicle, even for a day. The limit is 10 at any time during the year. One extra vehicle ends the scheme for the whole year.
- Using it for passenger buses or taxis. The scheme covers goods carriages only.
- Claiming fuel or repair expenses on top. The presumptive amount already covers all expenses. No separate deduction is allowed.
- Skipping advance tax instalments. 44AE has no single-payment concession. Pay in four instalments or pay interest.
- Filing the wrong ITR form. The correct form for 44AE is ITR-4. ITR-3 is for regular business income, not presumptive income.
Frequently Asked Questions
What is Section 44AE of the Income Tax Act?
Section 44AE is a presumptive tax provision for owners of goods carriages. You declare a fixed income per vehicle — Rs 7,500 a month for an ordinary goods vehicle, or Rs 1,000 per ton a month for a heavy goods vehicle — instead of keeping detailed books and working out actual profit.
Who can opt for presumptive taxation under Section 44AE?
Individuals, HUFs and partnership firms in the business of plying, hiring or leasing goods carriages, who own no more than 10 goods carriages at any time during the previous year. Passenger transport businesses cannot use it.
How much income do I have to show per vehicle under Section 44AE?
For a heavy goods vehicle, Rs 1,000 per ton of gross vehicle weight per month. For any other goods carriage, Rs 7,500 per vehicle per month. A part of a month counts as a full month, and you must show the higher of the fixed amount or what you actually earned.
What is a heavy goods vehicle under Section 44AE?
A goods carriage whose gross vehicle weight is more than 12,000 kg. Vehicles at or below that weight take the flat Rs 7,500 per month rate.
Can I declare income lower than the presumptive amount under Section 44AE?
Yes, but you must then maintain proper books of account and get them audited. Without books and an audit, the department will assess you on the presumptive amount.
Which ITR form should I file under Section 44AE?
ITR-4 (Sugam). It is the form for resident individuals, HUFs and firms who compute income on a presumptive basis under Sections 44AD, 44ADA or 44AE.
Can an LLP or a company use Section 44AE?
In practice, no. The scheme is used by individuals, HUFs and partnership firms filing ITR-4. LLPs file ITR-5 and companies file ITR-6, so they do not take the ITR-4 route.
What is the new section number for 44AE under the Income Tax Act 2025?
Section 44AE now sits in Table 2 of Section 58 of the Income-tax Act, 2025, which brings 44AD, 44ADA and 44AE together in one section from Tax Year 2026-27.
Official Sources
- Income Tax e-Filing Portal: https://www.incometax.gov.in
- Income Tax Department: https://www.incometaxindia.gov.in
Check the e-filing portal and the Income-tax Act, 2025 text for the current year’s rules before you file.
Reviewed by Asuthod Rathod, CA
Last updated: 5 November 2026
Disclaimer: This article is for general information only and is not tax advice. Tax rules change and individual cases differ, so check the official portal or consult a CA before filing.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.