Income Tax

Renting Out Your Truck or Commercial Vehicle: Which Head of Income Applies, and Can You Use Presumptive Taxation?

Reviewed by CA Nikhil Gupta · Last reviewed 14 June 2026

CA Nikhil Gupta·June 2026·5 min readIncome Tax

An individual who owns a truck or two and hires them out to transport companies, or someone who has invested in a fleet of a few goods carriages run by hired drivers, earns income that is taxed quite differently from renting out a flat or a piece of land. This is business income from plying, hiring or leasing goods carriages, and it comes with its own dedicated presumptive taxation option.

Why This Is Business Income, Not 'Rental' Income in the House-Property Sense

Different head, different rules: Income from hiring out trucks, lorries, buses or other vehicles used for transporting goods or passengers is generally treated as income from business, since it involves an active commercial activity (maintaining the vehicle, arranging drivers, fuel, permits, and securing hiring contracts), unlike passive rental of immovable property which falls under Income from House Property. This distinction matters because the computation rules, the availability of presumptive taxation, and the treatment of related expenses (depreciation, fuel, driver salaries, maintenance, loan interest) all follow the business income framework.

The Presumptive Scheme for Goods Carriages: Section 44AE

For an individual, HUF, firm (other than an LLP) or other eligible assessee who owns not more than 10 goods carriages at any time during the year, Section 44AE allows income to be computed on a per-vehicle, per-month basis: ₹1,000 per ton of gross vehicle weight (or unladen weight) per month or part of a month for a heavy goods vehicle (gross vehicle weight above 12,000 kg), and a flat ₹7,500 per vehicle per month or part of a month for any other goods carriage — without needing to maintain detailed books of account or compute actual profit, provided the eligibility conditions (including the 10-vehicle cap) are met. A taxpayer may still declare a higher income than this presumptive figure if actual profits are higher.

Worked Example

What If You Exceed the Vehicle Limit?

If the number of goods carriages owned exceeds 10 at any time during the year, the income needs to be computed under the regular provisions for business income, meaning actual receipts less actual expenses (fuel, driver wages, maintenance, insurance, depreciation on the vehicles, loan interest if vehicles are financed), with the usual books of account and, depending on turnover, potential tax audit requirements.

Depreciation on Commercial Vehicles

Where income is computed under the regular provisions (not presumptive), depreciation on commercial vehicles used in this hiring business can be claimed following the block of assets rules, with commercial vehicles often eligible for the rates applicable to motor vehicles used in a business of running them on hire, which can differ from the rate for vehicles used for the owner's own business purposes.

GST Considerations

Hiring out goods transport vehicles may have its own GST treatment (transport of goods by road services have specific GST provisions, including in some cases a reverse-charge mechanism where the recipient of the service pays GST), which is a separate compliance matter from the income tax treatment of the hire income discussed here.

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Earning income from hiring out trucks or other goods vehicles?Section 44AE's presumptive scheme could simplify your tax computation.

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2026 current-law quick reference

Finin2min answer: Commercial-vehicle letting can be business income. Where the goods-carriage presumptive provision applies, the number/type/weight of vehicles and months owned are statutory inputs, not a percentage of turnover.

2026 law transition: FY 2025–26 / AY 2026–27 remains under the Income-tax Act, 1961. Income of the tax year beginning 1 April 2026 is governed by the Income-tax Act, 2025 and the Income-tax Rules, 2026. Use the Department’s official comparison/transition tools before carrying an old section or form number into a post-1-April-2026 transaction.

What changes the answer?

What to check	What to do	Common mistake to avoid
Core classification	Commercial-vehicle letting can be business income. Where the goods-carriage presumptive provision applies, the number/type/weight of vehicles and months owned are statutory inputs, not a percentage of turnover.	Do not decide from the label used on an invoice, agreement or bank narration alone.
Edge case	The goods-carriage presumptive route is not a generic rental-income shortcut for every commercial vehicle or fleet structure.	Recompute when the fact pattern crosses this boundary.
Evidence	Reconcile the documents below to the tax/regulatory return before filing.	A correct legal rule with an unreconciled evidence trail can still fail in assessment or audit.
Effective date	Apply the law/form/rate for the actual transaction, tax year or proceeding date.	Do not mix FY 2025–26/AY 2026–27 legacy references with post-1-April-2026 forms.

Worked practical example

A taxpayer owns 7 qualifying trucks for the full year, including heavy goods vehicles. Apply the vehicle/tonnage/month formula only after confirming statutory eligibility.

Evidence checklist

RCs/vehicle weights
ownership months
freight/rent contracts
bank receipts
maintenance/fuel ledger

Primary-source checks: Income Tax Department — Business or Profession · Income-tax Act 2025 hub / transition

How to use this: This current-law summary reflects the latest position. Where it conflicts with an older rate, threshold, form or section reference elsewhere on the page, rely on the current, dated primary source above.

Frequently Asked Questions

Does the Section 44AE presumptive scheme apply to renting out passenger vehicles like cars or buses, or only goods carriages? ▼

Section 44AE is specifically framed around 'goods carriages' (vehicles used for transporting goods, such as trucks and lorries). Income from hiring out passenger vehicles (cars, buses) would generally need to be evaluated under the general business income provisions or other applicable presumptive schemes (such as those for businesses generally), rather than this goods-carriage-specific scheme, depending on the nature and scale of the activity.

If I opt for the presumptive scheme one year, can I switch back to regular computation (actual income and expenses) in a later year? ▼

The presumptive schemes generally come with conditions around switching between presumptive and regular computation, including, in some cases, restrictions on reverting to presumptive taxation for a number of years after opting out, or requirements for maintaining books and audit if income declared is below the presumptive level in certain circumstances. The specific conditions applicable to switching should be checked before making a change.

Can I claim depreciation on my trucks separately if I am using the Section 44AE presumptive scheme? ▼

Under the presumptive scheme for goods carriages, the income computed on the prescribed per-vehicle basis is generally considered to already account for normal business deductions, including depreciation, meaning a separate depreciation claim is generally not available in addition to the presumptive income figure. However, for the purpose of computing the written-down value of the vehicle for any future year (such as a year the vehicle is sold, or a year the presumptive scheme is not opted for), depreciation is deemed to have been allowed during the years the presumptive scheme was used, which can affect the cost basis for a later sale.

Source and review trail

Use the current official instrument, portal or regulator publication before acting.

Primary category: Income Tax
Official starting point: www.incometax.gov.in