Section 44AE Presumptive Tax for Truck and Lorry Owners

A truck owner with three 16-tonne lorries pays tax on a fixed Rs 5,76,000, declares it on ITR-4 Sugam, keeps no books, and skips the audit. That is the deal Section 44AE of the Income Tax Act, 1961 offers small goods transporters who own up to ten vehicles.

This page leads with the rate table and a worked example, then covers who qualifies, who should opt out, the common mistakes, and the FAQs.

Under Section 44AE, your taxable income is a flat figure per vehicle per month. You do not calculate actual profit. The rate depends only on whether the vehicle is a heavy goods vehicle.

The statute says “one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month” for heavy goods vehicles. A “heavy goods vehicle” is defined in the Explanation to Section 44AE as “any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms”. The terms goods carriage, gross vehicle weight and unladen weight take their meaning from Section 2 of the Motor Vehicles Act, 1988.

Two rules trip people up:

• A part of a month counts as a full month. Buy a truck on the 28th and that month is fully chargeable.
• “Per ton” uses the registered gross vehicle weight, not the cargo you actually carried. One ton means 1,000 kg here, so a 16,000 kg truck is 16 tons.

If even one truck had been bought partway through the year, only the months it was owned would be counted, with any part-month rounded up to a full month.

Section 44AE is open to any person, that is an individual, Hindu Undivided Family, firm or company, who:

• is engaged in the business of plying, hiring or leasing goods carriages, and
• owns not more than ten goods carriages at any time during the previous year.

The cap is on ownership, not usage. If you owned eleven trucks even for a single day in the year, the whole scheme is unavailable to you for that year. The ten-vehicle limit counts all goods carriages together, heavy and light.

You keep far less under Section 44AE, but you should still hold:

• Registration Certificate (RC) of each goods carriage, showing the registered gross vehicle weight
• Purchase or sale documents and dates of acquisition or transfer for each vehicle
• PAN, and TAN if you deduct TDS on payments. See how to apply for a TAN
• Bank statements and proof of any higher income you choose to declare
• Partnership deed, if you are a firm claiming partner interest or remuneration

You are free to declare a higher income than the presumptive figure if your actual profit is more. Once you opt in:

• No further deduction is allowed under Sections 30 to 38, including depreciation. The written down value of your vehicles is, however, computed as if depreciation under Section 32 had been claimed and allowed, so your asset value still falls each year.
• For partnership firms: practitioners widely hold that, unlike Section 44AD, Section 44AE was not amended to remove the partner-pay proviso, so interest and remuneration paid to partners within Section 40(b) limits may be deducted from the presumptive income. This is a firm-only edge case and the precise treatment is debated. From FY 2025-26 the Finance Act, 2024 also revised the Section 40(b) ceilings and brought in TDS under Section 194T on partner remuneration. If you run a transport firm, confirm the current position with a Chartered Accountant before filing.

The scheme is a flat charge, so it hurts when your real profit is low. Consider staying out and filing under normal provisions if:

• Your actual profit is well below Rs 7,500 or Rs 1,000 per ton per truck, for example in a loss year or after a big EMI and fuel-cost burden.
• You want to claim actual depreciation on newly bought trucks, which can be large in the first years.
• You own more than ten goods carriages, in which case Section 44AE simply does not apply.

If you declare income lower than the presumptive figure, Section 44AE(7) requires you to maintain books of account under Section 44AA and get them audited under Section 44AB, regardless of turnover. That audit cost is the trade-off for declaring a lower, true figure.

Truck transport income is presumptive like the freelancer and professional schemes; compare with presumptive taxation under 44AD and 44ADA if you also run a non-transport business.

• Using cargo weight instead of registered GVW. The Rs 1,000 rate is per ton of the vehicle's registered gross vehicle weight on the RC, not the load carried. (Explanation to Section 44AE)
• Forgetting the part-month rule. A truck owned for ten days is charged for a full month. (Section 44AE(2))
• Crossing the ten-vehicle cap. Owning an eleventh goods carriage on any single day disqualifies you for the whole year. (Section 44AE(1))
• Claiming depreciation on top. No deduction under Sections 30 to 38, including depreciation, is allowed once you use the scheme. (Section 44AE(4))
• Declaring a lower figure without audit. Lower-than-presumptive income triggers books under Section 44AA and audit under Section 44AB. (Section 44AE(7))
• Companies filing ITR-4. Only resident individuals, HUFs and firms other than LLP can use ITR-4 Sugam; companies and LLPs cannot.

If a Regional Transport Office or tax record about your vehicle weight is wrong, you can file an RTI. Draft one fast with the AI RTI Drafter, and read The RTI Playbook for the full process. The bare law is on the RTI Act, 2005 page.

Rs 1,000 per ton of gross vehicle weight per month for a heavy goods vehicle over 12,000 kg, and Rs 7,500 per month for any other goods carriage. A part of a month is counted as a full month.

Not more than ten goods carriages at any time during the year. If you own an eleventh vehicle even for one day, Section 44AE does not apply to you for that whole year.

Yes, Section 44AE itself applies to any person, including a company. But a company or LLP cannot file ITR-4 Sugam; they must report the presumptive income through the return form applicable to them, such as ITR-5 or ITR-6.

No. Once you opt into Section 44AE, no deduction under Sections 30 to 38, including depreciation, is allowed. The written down value is still reduced each year as if depreciation had been claimed.

You may declare the lower actual income, but then Section 44AE(7) requires you to keep books of account under Section 44AA and get a tax audit under Section 44AB, irrespective of turnover.

Resident individuals, HUFs and firms (other than LLP) with total income up to Rs 50 lakh file ITR-4 Sugam. Those outside this, including companies and LLPs, use the return form applicable to their status.

• Income Tax Department, Section 44AE: https://www.incometaxindia.gov.in/w/section-44ae-16
• Income Tax Department, presumptive taxation FAQs: https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+Tax+on+Presumptive+Taxation+Scheme
• The Income-tax Act, 1961 (bare Act), IndiaCode: https://www.indiacode.nic.in/bitstream/123456789/2435/1/a1961-43.pdf
• ITR-4 (Sugam) eligibility FAQs, Income Tax Department: https://www.incometax.gov.in/iec/foportal/help/e-filing-itr4-form-sugam-faq