Presumptive Taxation For Small Enterprises
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Q) I own three light commercial vehicles and am engaged in the business of transportation of goods. There are many cash transactions involved, and though I have an account of the expenses, I do not have the vouchers and hence have not been maintaining books of accounts. I wish to file my return of income, but am apprehensive that the Income Tax department will call for books of accounts. What should I do?
- Shivram Randev
You ought to file your return of income without any fear. In accordance with the provisions of Section 44AE of the Income Tax Act, 1961, any person owning not more than 10 goods carriages can file his/her return under the presumptive tax system without needing to maintain any books of accounts. The relevant extract of the provisions of Section 44AE are reproduced herein below for your ready reference:
(1) The scheme laid down in Section 44AE is optional.
(2) The scheme applies to an assessee who owns not more than 10 goods carriages at any time during the previous year and is engaged in the business of plying, hiring or leasing such goods carriages. The assessee who has taken goods carriage on hire purchase or on instalments will be deemed to be the owner of such goods carriage for the purposes of this scheme. The scheme is not applicable to persons who do not own any truck but operate trucks taken on hire.
(3) The deemed profit of a previous year is to be computed as under:
| Type Of Vehicle | Deemed Profit |
|---|
(a) For each heavy goods vehicle | - Rs 5000 [Rs 3500 upto assessment year 2010-11] per month or part of a month |
(b) For each vehicle other than heavy goods vehicles | - Rs 4500 [Rs 3150 upto assessment year 2010-11] per month or part of a month |
OR
Profit higher than the aggregate of (a) & (b) above, as may be declared by the assessee.
(4) Any deduction allowable under the head Income from Business, that is to say u/Ss. 30-38 shall be deemed to have been allowed, and no further deduction under those sections shall be allowed from the deemed profit as in (3) above. However, in the case of a firm, deduction u/s. 40(b) [i.e., interest/salary paid to any partner/ working partner by a firm] will be allowed to the firm in computing the firm’s deemed profit as in (3) above. Similarly, depreciation on assets used for the said business shall also be deemed to have been allowed, and the written down value of the said assets shall be worked out on that basis.
(5) The assessee is not required either to maintain books of accounts u/s.44AA or get the accounts audited u/s.44AB in respect of the aforesaid business income. In computing the monetary limits u/s. 44AA/44AB, the gross receipts or, as the case may be, the income from the said business shall be excluded.
However, if the assessee claims that the profit from the said business in a previous year is less than the deemed profit specified in (3) above, then, he/she is required to maintain books of account u/s. 44AA (2) and also get the same audited us.44AB, irrespective of monetary limits of gross receipts/income of that previous year [Vide section 44AE (7)].
(6) The profit computed above shall be aggregated with the other incomes of the assessee, and thereafter, deductions under Chapter VI-A and tax rebates under Chapter VIII-A, if any, will be allowed.