PRESUMPTIVE TAXATION SCHEME FOR SMALL BUSINESS MAN UNDER SECTION 44AE FOR AY 2019-20

What is PRESUMPTIVE TAXATION SECHEME U/S 44AE

The Motto of Income Tax Act to provide the relief a person, who is engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year, to maintain the books of accounts and get his accounts audited. If a person opt the presumptive scheme than he is not required to maintain the books of accounts and get his accounts audited.

Who can opt the presumptive scheme:

  • Individual.
  • HUF.
  • Partnership Firm
  • A Company
  • An AOP or BOI, whether incorporated or not,.
  • A local Authority
  • Every artificial judicial person   

Business Covered Under Scheme:

  • Business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year.
  • If a person, own more than 10 goods vehicles at any time during the year, cannot take the benefit of this scheme.

Minimum Income

  • If a person who is willing to opt the scheme of section 44AE, income will be computed on an estimated basis.
  • In this scheme estimated income calculated on following basis :

A. For Heavy Goods Vehicle

  • In this case income will be calculated at the rate of Rs.1000/ per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle owned by a person.
  • A person can declare the higher income against the estimated income as per scheme i.e. more than of Rs.1000/.
  • Heavy Goods Vehicle means any goods carriage having gross vehicle weight exceeding 12,000 kilograms.

B. For other than heavy goods vehicle

  • In this case income will be calculated at the rate of Rs.7500/ for every month or part of a month during which the other than heavy goods vehicle owned by a person.
  • A person can declare the higher income against the estimated income as per scheme i.e. more than of Rs.7500/

Books of Accounts

In this scheme it is not required to maintain the books of accounts as per Section 44AA if he declare the minimum estimated income during the year and also not required to get his accounts audited.

Advance Tax

  • In this scheme no any relaxation available regarding payment of advance tax.
  • Rule of payment of advance tax is applicable.

Expenses Allowed

  • In this scheme the provisions of allowance/disallowances as provided for under the Income-tax Act, will not apply and income computed at the presumptive rate of Rs. 1,000/Rs. 7,500 will be the final income.
  • The income computed at the rate of Rs. 1,000/Rs. 7,500 per goods vehicle per month will be the final net taxable income of the business and no further expenses will be allowed or disallowed.
  • But in the case of Partnership Firm further deduction can be claimed on account of remuneration and interest paid to partners.

If income declare less than estimated income

In this scheme if a person declared his income less than the estimated income of Rs.1000/ or Rs.7500/ per goods vehicle per month than he is required to maintain the books of accounts as per provision of section 44AA and also required to get his accounts audited as per provisions of section 44AB of I.T.Act,1961.

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