Slot charter should benefit under tonnage tax scheme

By Ranjeet Mahtani and Stella Joseph, Economic Laws Practice
0
1968
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The tonnage tax scheme was introduced in 2004 through chapter XII-G of the Income Tax Act, 1961, to provide incentives for the shipping industry. The scheme allows Indian shipping companies to compute corporate income tax on a notional income, as a factor of the net tonnage of a ship. Under the scheme, a “qualifying company” is eligible for the preferential tax system if it owns at least one “qualifying ship”. A qualifying ship is one having a “valid certificate”, i.e. a licence or certificate issued under the Merchant Shipping Act, 1958 (MSA).

Ranjeet Mahtani Senior associate Economic Laws Practice
Ranjeet Mahtani
Senior associate
Economic Laws Practice

In the chapter, by specific inclusion, the operation of slots (spaces for containers on a ship) which are chartered in is covered within the scheme, and slot charters are not required to be operated on qualifying ships. Yet, the Cochin bench of the Income Tax Appellate Tribunal (ITAT) in July held that slot charters are required to be operated on qualifying ships having valid certificates to be eligible under the scheme.

The ITAT reasoned that: chapter XII-G is applicable only to the “income from the business of operating qualifying ships” – a term used in section 115VA, which sets out the coverage of the scheme; the benefit of the scheme is available only to qualifying ships (having a valid certificate), and this applies to ships on which slots are chartered; section 115VI(6) provides that the income attributable to operating a non-qualifying ship must be computed in accordance with other provisions of the act, i.e. those not in chapter XII-G.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

Economic Laws Practice is a full-service law firm with headquarters in Mumbai and offices in New Delhi, Pune and Ahmedabad. Ranjeet Mahtani is a senior associate at the firm and Stella Joseph is an associate.

ELP

Economic Laws Practice

1502 A Wing, Dalamal Towers

Free Press Journal Road

Nariman Point, Mumbai 400021

India

Tel: +91 22 6636 7000

Fax: +91 22 6636 7172

Email: RanjeetMahtani@elp-in.com

StellaJoseph@elp-in.com

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link