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    TaxKiln

    Tax for drivers and taxi operators in India

    A passenger taxi or cab is a business taxed under Section 44AD (6% digital, 8% other), not the Section 44AE flat-rate scheme, which is only for goods carriages. For app-based cabs the aggregator handles GST on rides under Section 9(5) of the CGST Act, so an individual driver generally does not register; independent radio-taxi service is taxed at 5% without input credit.

    Presumptive + GST + TDS at a glance

    Presumptive taxation

    Section:
    Sec 44AD
    Deemed profit rate:
    6% on digital receipts / 8% on other receipts (passenger transport); 44AE applies only to goods carriages
    Classification:
    business

    GST treatment

    Slab:
    5%
    SAC:
    9964 (passenger transport); app rides taxed via aggregator under Section 9(5)
    Composition eligible:
    No
    Reverse charge (RCM):
    Applicable

    TDS exposure

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    Last reviewed:

    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

    Passenger transport such as a taxi or cab in India is a business taxed under Section 44AD. A common confusion is Section 44AE, the flat-rate per-vehicle scheme, which applies to goods carriages, not passenger vehicles, so a taxi driver uses 44AD, while a goods-truck owner uses 44AE. For app-based cab drivers, GST on the ride is generally handled by the aggregator under Section 9(5) of the CGST Act, so an individual driver below the threshold often does not register.

    What business structure do drivers and taxi operators use?

    The common patterns for drivers and taxi operators are: Sole proprietor driver, simplest, on 44AD (passenger transport), Small fleet owner, multiple cabs, still 44AD for passenger transport, Goods-carriage owner, a different trade, uses the 44AE flat-rate scheme. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

    Passenger transport uses 44AD, not 44AE

    A taxi or cab is passenger transport, which is a business under Section 44AD: a deemed 8% of turnover, or 6% on digital receipts, up to Rs 2 crore (Rs 3 crore where cash is 5% or less). The Section 44AE flat-rate scheme, a fixed Rs 7,500 per vehicle per month for up to 10 vehicles, applies to goods carriages, not passenger vehicles, so do not apply 44AE to a taxi. A goods-transport owner is a separate trade that does use 44AE.

    Passenger transport (taxi/cab) is a business under Section 44AD; the Section 44AE flat per-vehicle scheme applies only to goods carriages. (Income-tax Act 1961 ss.44AD/44AE (consolidated into Income-tax Act 2025 s.58))

    GST: the aggregator handles app rides

    For app-based cabs (the common case), the aggregator is liable to collect and pay GST on the ride under Section 9(5) of the CGST Act, so an individual driver providing rides through the platform generally does not have to register or charge GST on those rides. If you operate independently (not through an app) and your turnover crosses the threshold, passenger transport by a radio taxi or cab is taxed at 5% (without input credit) in the usual structure. Always confirm whether your rides go through an aggregator, because that determines who accounts for the GST.

    For app-based rides the aggregator pays GST under Section 9(5); independent radio-taxi service is generally taxed at 5% without input credit. (CGST Act 2017 s.9(5) (electronic commerce operator); SAC 9964)

    Vehicle finance and running costs

    Under regular books a cab is a business asset with depreciation plus running costs (fuel, servicing, insurance, permit). Under presumptive Section 44AD the deemed 6 or 8% is treated as already net of these costs and of depreciation, so you do not separately claim fuel or EMIs against the deemed profit. Many single-cab drivers find 44AD simpler, but if your real costs are high relative to fares, keeping books and claiming actual expenses can give a lower taxable profit, compare the two.

    Under 44AD the deemed profit is net of running costs and depreciation; keeping books lets a high-cost operator claim actual expenses instead. (Income-tax Act 1961 s.44AD + s.32 (depreciation))

    Allowable expenses

    CategoryExamplesTax treatment
    Vehicle running costsFuel, servicing, tyres, insurance, permit, fitnessDeductible if keeping books; subsumed in deemed profit under 44AD
    Vehicle financeInterest on a vehicle loanDeductible if keeping books; in deemed profit under 44AD
    Platform commissionAggregator commission and feesDeductible business expense
    Driver wagesPaid drivers for a small fleetDeductible if keeping books; pay over Rs 10,000/day by bank (40A(3))
    AdminMobile, navigation, accountantDeductible (apportion personal phone use)

    Vehicle and travel costs

    The cab is the core business asset. Under regular books it depreciates (motor-vehicle block, generally 15% WDV) and you claim fuel, servicing, insurance, permit and loan interest. Under presumptive Section 44AD the deemed 6 or 8% is treated as already net of all running costs and depreciation, so no separate claim is made. A high-cost, low-fare operator should compare keeping books against 44AD.

    Capital allowances and equipment

    On regular books, the cab depreciates in the motor-vehicle block (generally 15% WDV). Under Section 44AD no separate depreciation is claimed, but the written-down value still reduces for a future sale, so keep the purchase and finance records.

    Worked example

    Ramesh — Chennai, TN

    app-based cab driver (single vehicle) (2026-27)

    Annual fare earnings Rs 9 lakh through a ride-hailing app, mostly digital. The app handles GST on the rides. He has a vehicle loan and high fuel costs.

    For income tax, under Section 44AD his deemed profit is 6% of Rs 9 lakh = Rs 54,000, below the Rs 4 lakh new-regime exemption, so income tax is nil. Because the app accounts for GST on rides under Section 9(5), he does not need to register or charge GST on those rides. If his fuel, EMI and servicing costs are very high relative to fares, he could instead keep books and claim actual expenses, which might show an even lower or loss position, so he compares the two before opting for 44AD. He uses 44AD, not the 44AE goods-carriage scheme, because a taxi is passenger transport.

    Common audit triggers for drivers and taxi operators

    Frequently asked questions

    Do I use 44AD or 44AE as a taxi driver?+
    Section 44AD. A taxi or cab is passenger transport, which is a business under 44AD (deemed 6 or 8% of turnover). The Section 44AE flat-rate scheme (a fixed Rs 7,500 per vehicle per month) applies only to goods carriages, not passenger vehicles, so it does not apply to a taxi. A goods-truck owner is the one who uses 44AE.
    Do I need to register for GST if I drive for an app?+
    Generally no, for the rides themselves. The aggregator is liable to collect and pay GST on app-based rides under Section 9(5) of the CGST Act, so an individual driver providing rides through the platform usually does not register or charge GST on those rides. Confirm your arrangement, because independent (non-app) service can be different.
    Can I claim my fuel and EMI against tax?+
    If you keep regular books, yes, fuel, servicing, insurance, permit and vehicle-loan interest are deductible, and the cab depreciates. If you use presumptive Section 44AD, the deemed 6 or 8% is treated as already net of all these costs, so you do not claim them separately. A high-cost, low-fare driver should compare keeping books against 44AD.
    What if I run a small fleet of cabs?+
    A passenger-cab fleet still uses Section 44AD for the income (subject to the turnover limit), and you can claim paid-driver wages if you keep books, paying them digitally to stay deductible under Section 40A(3). The 44AE per-vehicle scheme remains a goods-carriage scheme and does not apply to passenger fleets.

    Last reviewed: