Section 44AE Presumptive Taxation 2026: How Goods Transporters Are Taxed Per Vehicle, and the Audit Trap Most Miss

Own a truck, tempo, or tanker and lease it out, or run a small fleet? Section 44AE lets you skip maintaining books of account and pay tax on a fixed, per-vehicle presumptive income instead of your actual profit — as long as you own no more than 10 goods carriages at any point in the year. Most transport operators who use it know the broad idea. Far fewer know the exact per-vehicle math, or that declaring even one rupee less than the presumptive figure drags them straight into a full tax audit.

Who Can Use Section 44AE

The scheme covers anyone in the business of plying, hiring, or leasing goods carriages — trucks, tempos, tankers, and similar vehicles used to transport goods, not passengers. Unlike Section 44AD, which is restricted to resident individuals, HUFs, and partnership firms (excluding LLPs), Section 44AE has no such restriction: individuals, HUFs, partnership firms, LLPs, and companies can all use it, provided the vehicle-count condition is met.

The one hard condition is the fleet size: you must not own more than 10 goods carriages at any time during the financial year. Cross that limit even briefly and the presumptive scheme stops being available for the year — you fall back to computing actual business income under the regular provisions.

How the Presumptive Income Is Calculated

Income is deemed per vehicle, per month or part of a month it was owned, at a fixed rate that depends on the vehicle's category:

For example, a heavy goods vehicle with a gross vehicle weight of 16 tonnes is deemed to earn 16 × ₹1,000 = ₹16,000 a month, or ₹1,92,000 for a full year, regardless of what it actually billed. A light or medium goods carriage owned for the full year is deemed to earn ₹7,500 × 12 = ₹90,000, again irrespective of actual freight income. If you own a mixed fleet, each vehicle is computed separately and the totals added together.

The Catch: Declaring Lower Profit Triggers a Mandatory Audit

Section 44AE lets you declare a higher profit than the presumptive figure if you actually earned more — there's no cap on the upside. The problem is on the downside. If your actual profit is genuinely lower than what the formula deems, and you want to declare that lower, real number instead, you lose the exemption from maintaining books. You must then keep full books of account under Section 44AA and get them audited under Section 44AB — regardless of whether your total income falls below the basic exemption limit.

In practice, this means most small operators are better off accepting the presumptive figure even in a slow year, unless the actual loss is large enough that the tax saved clearly outweighs the cost and effort of an audit.

Deductions, Depreciation, and What's Already Built In

The presumptive income under Section 44AE is treated as already net of all business expenses, including depreciation on the vehicles, fuel, driver salaries, and maintenance. You cannot separately claim depreciation or any other business expense on top of the deemed figure. What you can still claim, outside the presumptive computation, are deductions under Chapter VI-A — such as Section 80C or 80D — against your total income, since those apply at the overall return level, not the business-income level.

Which ITR Form and Deadline

Individuals, HUFs, and firms (other than LLPs) declaring income under Section 44AE typically file ITR-4 (Sugam), the same form used for Section 44AD and 44ADA presumptive income — see our ITR filing guide for the full form-selection logic. Companies and LLPs using Section 44AE file the return form applicable to their entity type. For non-audit cases, the due date for FY 2025-26 (AY 2026-27) is July 31, 2026; if the audit trigger applies because you've declared lower profit, the extended audit due date applies instead.

Section 44AE sits alongside Section 44AD, for small traders and general businesses, and Section 44ADA, for specified professionals — our guides to Section 44AD and Section 44ADA cover those two if goods transport isn't your only source of business income.

What Changes From FY 2026-27

The Income-tax Act, 2025, effective from Tax Year 2026-27, consolidates Sections 44AD, 44ADA, and 44AE of the 1961 Act into a single Section 58, organised as one table covering general business, transport business, and specified professions. The CBDT has confirmed this is a renumbering and restructuring exercise, not a policy change — the ₹1,000-per-ton and ₹7,500-per-month rates, the 10-vehicle limit, and the audit trigger for lower declared profit all carry forward unchanged. Our guide to what the Income-tax Act, 2025 changes covers the broader restructuring if you want the full picture beyond presumptive taxation.