For 44AE, do I compute on gross vehicle weight or on unladen weight for a heavy goods vehicle?
Gross vehicle weight. For a heavy goods vehicle — gross vehicle weight exceeding 12,000 kg — presumptive income is Rs. 1,000 per ton of gross vehicle weight as defined in the Motor Vehicles Act, 1988, for every month or part of a month. Unladen weight is the measure only for a tractor or a road-roller; other goods carriages remain at Rs. 7,500 per month or part of a month.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, ITA-II Division, Department of Revenue, Ministry of Finance) on 2019-08-14, reported as F.No. 225/233/2019/ITA-II. It bears on section 44AE of the Income Tax Act 1961, in Presumptive Taxation & Audit matters.
It takes the choice of measure away from the assessee and ties it to the statutory registration category, so the computation is not open to argument in a s.44AE case. It favours the revenue in most cases, because gross vehicle weight is the higher figure. The scheme itself remains available only to an assessee who does not own more than ten goods carriages at any time during the year.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 44AE as amended computes presumptive income for the business of plying, hiring or leasing goods carriages at a differential rate depending on the weight of the vehicle. Field formations and assessees raised the difficulty that the section refers both to 'gross vehicle weight' and to 'unladen weight', and it was unclear which measure applied to which class of vehicle when computing the monthly presumptive figure for a heavy goods vehicle. The scheme is available to an assessee who does not own more than ten goods carriages at any time during the year. The Board issued a clarification to settle the point.
Section 44AE itself provides that for a heavy goods vehicle the profits and gains are an amount equal to 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 during which the vehicle is owned in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher. For a goods carriage other than a heavy goods vehicle the figure is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount actually earned, whichever is higher. 'Heavy goods vehicle' means a goods carriage whose gross vehicle weight exceeds 12,000 kilograms, and 'goods carriage', 'gross vehicle weight' and 'unladen weight' carry the meanings given to them by section 2 of the Motor Vehicles Act, 1988. The statute therefore does not confine the heavy goods vehicle computation to gross vehicle weight: it says gross vehicle weight or unladen weight, as the case may be. The clarification said to have settled which measure applies to which vehicle could not be located.
Before the Finance Act 2018 section 44AE applied one figure to every goods carriage irrespective of tonnage, and the Board's Explanatory Notes to that Act, Circular No. 8/2018 dated 26 December 2018, record why that was changed: the scheme was meant to relieve small transporters, but an operator of large-capacity vehicles earning higher margins was paying the same presumptive tax, which was against tax equity. So a separate limb was created for heavy goods vehicles - the Explanatory Notes describe it as more than 12MT gross vehicle weight - computed at one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, with other vehicles left on the flat figure. The Explanation to the section was amended at the same time to define 'gross vehicle weight', 'unladen weight' and 'heavy goods vehicle', the first two by reference to section 2 of the Motor Vehicles Act, 1988 and the third by the 12,000 kilogram threshold. That drafting leaves the choice of measure to turn on how the particular vehicle is described under the Motor Vehicles Act rather than on the assessee's election. Which measure applies to which class of vehicle is the question the clarification of 14 August 2019 is said to answer, and that document could not be found.
being a heavy goods vehicle, shall be an amount equal to 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 during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher
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Handle my notice → Ask a CA on WhatsAppGross vehicle weight. For a heavy goods vehicle — gross vehicle weight exceeding 12,000 kg — presumptive income is Rs. 1,000 per ton of gross vehicle weight as defined in the Motor Vehicles Act, 1988, for every month or part of a month. Unladen weight is the measure only for a tractor or a road-roller; other goods carriages remain at Rs. 7,500 per month or part of a month. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, ITA-II Division, Department of Revenue, Ministry of Finance) and bears on section 44AE of the Income Tax Act 1961. It is reported as F.No. 225/233/2019/ITA-II. It takes the choice of measure away from the assessee and ties it to the statutory registration category, so the computation is not open to argument in a s.44AE case. It favours the revenue in most cases, because gross vehicle weight is the higher figure. The scheme itself remains available only to an assessee who does not own more than ten goods carriages at any time during the year. If it applies to you, the first step is this: Take the gross vehicle weight for each vehicle from its registration particulars and check whether it exceeds 12,000 kg.
Section 44AE as amended computes presumptive income for the business of plying, hiring or leasing goods carriages at a differential rate depending on the weight of the vehicle. Field formations and assessees raised the difficulty that the section refers both to 'gross vehicle weight' and to 'unladen weight', and it was unclear which measure applied to which class of vehicle when computing the monthly presumptive figure for a heavy goods vehicle. The scheme is available to an assessee who does not own more than ten goods carriages at any time during the year. The Board issued a clarification to settle the point. The matter was decided on 2019-08-14 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, ITA-II Division, Department of Revenue, Ministry of Finance). On those facts the CBDT Circulars & Instructions held as follows. Section 44AE itself provides that for a heavy goods vehicle the profits and gains are an amount equal to 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 during which the vehicle is owned in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher. For a goods carriage other than a heavy goods vehicle the figure is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount actually earned, whichever is higher. 'Heavy goods vehicle' means a goods carriage whose gross vehicle weight exceeds 12,000 kilograms, and 'goods carriage', 'gross vehicle weight' and 'unladen weight' carry the meanings given to them by section 2 of the Motor Vehicles Act, 1988. The statute therefore does not confine the heavy goods vehicle computation to gross vehicle weight: it says gross vehicle weight or unladen weight, as the case may be. The clarification said to have settled which measure applies to which vehicle could not be located.
Before the Finance Act 2018 section 44AE applied one figure to every goods carriage irrespective of tonnage, and the Board's Explanatory Notes to that Act, Circular No. 8/2018 dated 26 December 2018, record why that was changed: the scheme was meant to relieve small transporters, but an operator of large-capacity vehicles earning higher margins was paying the same presumptive tax, which was against tax equity. So a separate limb was created for heavy goods vehicles - the Explanatory Notes describe it as more than 12MT gross vehicle weight - computed at one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, with other vehicles left on the flat figure. The Explanation to the section was amended at the same time to define 'gross vehicle weight', 'unladen weight' and 'heavy goods vehicle', the first two by reference to section 2 of the Motor Vehicles Act, 1988 and the third by the 12,000 kilogram threshold. That drafting leaves the choice of measure to turn on how the particular vehicle is described under the Motor Vehicles Act rather than on the assessee's election. Which measure applies to which class of vehicle is the question the clarification of 14 August 2019 is said to answer, and that document could not be found. In the words reproduced by the source cited on this page: "being a heavy goods vehicle, shall be an amount equal to 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 during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher"
It was decided by the CBDT Circulars & Instructions on 2019-08-14 and is reported as F.No. 225/233/2019/ITA-II. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 44AE, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. Section 44AE itself provides that for a heavy goods vehicle the profits and gains are an amount equal to 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 during which the vehicle is owned in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher. For a goods carriage other than a heavy goods vehicle the figure is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount actually earned, whichever is higher. 'Heavy goods vehicle' means a goods carriage whose gross vehicle weight exceeds 12,000 kilograms, and 'goods carriage', 'gross vehicle weight' and 'unladen weight' carry the meanings given to them by section 2 of the Motor Vehicles Act, 1988. The statute therefore does not confine the heavy goods vehicle computation to gross vehicle weight: it says gross vehicle weight or unladen weight, as the case may be. The clarification said to have settled which measure applies to which vehicle could not be located. It arises in Presumptive Taxation & Audit matters, on section 44AE of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, ITA-II Division, Department of Revenue, Ministry of Finance. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Compute month by month, counting part of a month as a month, and separately for vehicles above and below the threshold. Cite the clarification where the officer applies the wrong measure — it is the department's own instruction and binds the officer, though it does not settle the point for a court.
Validity check could not be completed. The clarification could not be found in a subscription database. Searches were run on the file number 225/233/2019/ITA-II, on the file number without the divisional suffix, on the substance (gross vehicle weight, unladen weight, heavy goods vehicle, section 44AE) and on section 44AE restricted to circulars and notifications; the last returned twenty-two CBDT instruments referring to section 44AE, none of them dated 14 August 2019 and none addressing this question. It may never have been issued as a published circular, notification or instruction, in which case it is an internal communication that a taxpayer cannot rely on as a Board circular. What can be confirmed is the statute: the rates, the 12,000 kilogram definition of a heavy goods vehicle and the Motor Vehicles Act definitions are in section 44AE itself and in Circular No. 8/2018, the Explanatory Notes to the Finance Act 2018. Note also that the Income-tax Act, 1961 stands repealed. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The clarification said to bear F.No. 225/233/2019/ITA-II and to be dated 14 August 2019 could not be found in a subscription database on searches of the file number, of the substance, and of section 44AE restricted to CBDT circulars and notifications. Treat the citation as unconfirmed and obtain the document before relying on it. Two corrections follow from reading the section itself. First, the presumptive figure in each limb is the stated amount or the amount claimed to have been actually earned from the vehicle, whichever is higher - the entry previously stated the figure as though it were fixed. Second, for a heavy goods vehicle the section prescribes one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be; it does not say that gross vehicle weight always governs, and it says nothing about tractors or road-rollers. The 12,000 kilogram threshold, previously unverified, is confirmed: clause (aa) of the Explanation defines a heavy goods vehicle as a goods carriage whose gross vehicle weight exceeds 12,000 kilograms, and 'gross vehicle weight' and 'unladen weight' take their meanings from section 2 of the Motor Vehicles Act, 1988. The clarification itself was not located; the citation and date come from a secondary reproduction and remain unconfirmed. No judicial decision applying it was found. The Motor Vehicles Act, 1988 definitions of 'gross vehicle weight' and 'unladen weight' in section 2 were not read, so which measure attaches to which class of vehicle in practice is still open. Section 44AE of the Income-tax Act, 1961 is indexed against section 58 of the Income-tax Act, 2025, but the text of that section was not read and the rates under it were not checked. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Section 44AE itself provides that for a heavy goods vehicle the profits and gains are an amount equal to 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 during which the vehicle is owned in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher. For a goods carriage other than a heavy goods vehicle the figure is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount actually earned, whichever is higher. 'Heavy goods vehicle' means a goods carriage whose gross vehicle weight exceeds 12,000 kilograms, and 'goods carriage', 'gross vehicle weight' and 'unladen weight' carry the meanings given to them by section 2 of the Motor Vehicles Act, 1988. The statute therefore does not confine the heavy goods vehicle computation to gross vehicle weight: it says gross vehicle weight or unladen weight, as the case may be. The clarification said to have settled which measure applies to which vehicle could not be located.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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