Budget 2014 has lot of forward looking amendments aimed at
simplifications and clarifications for the taxpayers at large. There are also
certain amendments to back the tax administration by nullifying decisions
rendered by appellate authorities. However, the homework done by the tax
department is laudable for the reason that it is in the right direction to
provide the hassle-free tax compliance in the days to come.
One of the amendments proposed in the Finance Bill, 2014 relates
to upward revision of presumptive tax payable by taxpayers under section 44AE.
Amendment to this provision is due and previously it was amended by the Finance
(No.2) Act, 2009.
Budget 2014
The Budget 2014 proposes for enhancement of presumptive income
which is tabulated as under:
|
Existing
|
Proposed
|
|
For each heavy goods vehicle (HGV) owned by the assessee for
every month or part of a month, presumptive income at Rs.5,000 per month per
vehicle
|
|
|
|
For each goods carriage owned by the assessee for every month
or part of a month, presumptive income at Rs.7,500 per month per vehicle.
|
|
For each vehicle other than heavy goods vehicle owned by the
assessee for every month or part of a month, presumptive income at Rs.4,500
per month per vehicle.
|
|
Features of section 44AE
The following are the features of this provision:
■ Any
assessee who owns not more than 10 goods carriages at any time during the
previous year is eligible to opt for this provision.
■ Such
assessee must be engaged in the business of plying, hiring or
leasing of such goods carriages in order to be eligible for avail this section.
■ Assessees
such as individuals, HUFs, firms, AOPs could avail this provision.
■ The
presumptive income offered under this section will deem that all deductions as
applicable are allowed except section 40(b).
■ In the
case of firms, on this presumptive income deduction such as working partner
salary and interest on capital subject to the conditions and limits specified
in section 40(b), could be claimed.
■ An assessee
opting for this provision need not maintain books of account mandated by
section 44AA. Thus no penalty could be levied under section 271A.
■ Even if
gross receipt exceeds the limit prescribed for audit under section 44AB i.e
Rs.100 lakhs it is not required to be done. Therefore no penalty under section 271B is
exigible.
■ The
Finance Bill, 2014 proposes a change by increasing the presumptive income at
Rs.7,500 per month or part of a month for which the vehicle was owned by the
assessee.
■ The Finance
Bill, 2014 proposes to dispense with the system of identifying heavy goods
vehicle or light commercial vehicle (LCV). It provides for uniform presumptive
income in respect of vehicles used in the business of plying, hiring or leasing
of such goods carriages.
What more could be done?
The change proposed in section 44AE is very simple. It has
proposed for upward revision of presumptive income from Rs.5000 per month for
heavy goods carriages and Rs.4500 per month for other goods carriages by a
uniform adoption of Rs.7,500 per month for any goods carriages from the
assessment year 2015-16 onwards.
The lawmakers could have inserted an Explanation to the
provision to say that the taxpayers are eligible to claim depreciation (being
non-cash expenditure) as eligible for cash flow source. This would have
provided clarity and enabled the taxpayers to claim the same as a source for
any investment which they may do out of such business income
