Guidelines for Providing  Training by Shipping Companies  for Tonnage-tax Scheme under Chapter XII-G of Income-tax Act

Ministry of shipping, road transport and highways

Notification No. SO 1436(E), dated 30-12-2004

In pursuance of section 115VU of the Income-tax Act, 1961, the Central Government hereby notifies the following guidelines effective from 1st January, 2005 for providing training by Shipping Companies opting for Tonnage Tax scheme under Chapter XII-G of the Income-tax Act, 1961.

1.   A tonnage tax company shall have trainee-officers on board all or any of its Qualifying Ships and shall ensure that the aggregate of training man-days on all Qualifying Ships in a financial year is not less than the minimum training requirement.

ExplanationFor the purposes of these Guidelines,

          (a)  A trainee-officer means a person possessing the requisite qualifications specified under the Manual on Maritime Education & Training Assessment (META) published by the Director General of Shipping and/or as per guidelines prescribed by the Director General of Shipping, from time to time, to be a trainee-officer to join on board a ship.

          (b)  The Trust means The Maritime Training Trust settled by the Directorate General of Shipping in consultation with INSA.

          (c)  The minimum training requirement for a financial year shall be:

      (1)  in case of ship owned or chartered-in by the tonnage tax company, (other than space or slot charters), the number of man-days shall be equivalent to the number of days for which such ships are operated by the tonnage tax company during the financial year multiplied by number of trainee-officers required on such ships based on one (1) trainee-officer for every ten (10) complement as per the Minimum Safe Manning Document or pro rata thereof:

      (2)  in case of space charters or slot charters, the number of maydays to be calculated by dividing the Net Tonnage of slot/space charters of the tonnage tax company by the Net Tonnage Factor and multiplying the result by number of days for which such ships are operated by the tonnage tax company during the financial year and shall include any shortfall of the immediately preceding financial year brought forward in accordance with clause 15.

                Explanation 1For the purpose of this clause, the Net Tonnage of slot/space charters shall be Net Tonnage as calculated under the notification issued in the Official Gazette vide Explanation to section 115 VG of the Income-tax Act, 1961.

                Explanation 2The Net Tonnage Factor shall be the factor notified by the Director General of Shipping for each financial year calculated as the aggregate Net Tonnage of all qualifying ships registered under the Merchant Shipping Act, 1958 at the end of the preceding financial year divided by the total number of such ships at the end of the preceding financial year and shall be notified by the Director General of Shipping within 60 days from the beginning of each financial year.

          (d)  Indian National Shipowners Association means the association of Indian ship-owners registered under section 25 of the Companies Act, 1956.

          (e)  Financial year means the period beginning on April 1 and ending on March 31.

2.   A tonnge tax company shall recruit trainee-officers on board all or any of its qualifying ships from their own resources or from persons empanelled in the roster maintained by the Trust as a trainee-officer and shall provide the training in accordance with the Manual on Maritime Education & Training Assessment (META) and/or as per training guidelines prescribed by the director General of Shipping, from time to time.

3.   All such trainee-officers on board shall be in addition to the minimum safe manning document. Any trainee-officer on the board of a Qualifying Ship shall not be taken into account for the purpose of determining the minimum safe-manning requirements prescribed by the Director General of Shipping.

4.   The amount of training fees payable by such trainee-officer and the administrative cost payable by the trainee-officer and the tonnage tax company to the Trust and stipend payable by the tonnage tax company to the trainee-officer shall be prescribed by the Director General of Shipping, from time to time.

5.   The training fees payable by a trainee-officer to the Trust under clause (4) shall be paid in advance for six (6) months and such fees, together with administrative charges paid by a trainee-officer, shall be collected by the tonnage tax company in the name of the Trust and forthwith deposited with the Trust. It will be the responsibility of the tonnage tax company to so deposit the amount with the Trust not later than seven (7) working days from the receipt thereof and maintain the records for the same.

6.   The Trust funds may be used for meeting all the administrative expenses relating to the Tonnage Tax cell to be created by the Director General of Shipping and for the promotion of training and employment of Indian seafaring officers and for payment towards refund of fees in accordance with clause 10.

7.   The provision of training to a trainee-officer shall not be considered as guarantee of employment to such trainee-officer on completion or cessation of such training.

8.   On completion of training by a trainee-officer, he shall be required to work with the tonnage tax company for such period, not exceeding one year, as may be required by the tonnage tax company. Until he completes this obligation, the trainee-officer shall not be entitled to work with any other shipping company in the world and an undertaking to this effect shall be furnished by the trainee-officer in favour of the Tonnage Tax company before being accepted for training, provided that this condition would not apply if the tonnage tax company does not offer him a job within a month of completion of training.

9.   Where a trainee-officer on completion of training with a tonnage tax company, works with that tonnage tax company for a consecutive period of at least three years (subject to deducting leave periods), he shall be entitled to claim a refund of fees paid by him to the Trust on completion of such period of three years and such claim would be paid and settled by the Trust provided such claim is made within six months of the completion of the period of three years and on production of an appropriate certificate to that effect from the tonnage tax company.

10.   If the trainee-officer is not offered an employment for three consecutive years by the concerned tonnage tax company, the trainee-officer is entitled to seek refund of the fees paid, provided such claim is made within six months of the date on which the employment of continued employment is not offered.

11.   The following periods shall be deemed as the period during which training is imparted by the tonnage tax company

           (i)  The period, when the requirements of a tonnage tax company for one or more trainee-officers are not met due to non-availability of officers registered in the roster maintained by the Trust, starting from the date of acknowledgement by the Trust of a request in writing till the date of availability of trainee-officers in response to such request.

          (ii)  The period for which a trainee-officer is absent on the board of a Qualifying Ship due to delay in reporting by the trainee-officer or a delay for any reason beyond the control of the tonnage tax company, where such delay has been intimated by the company to the Director General of Shipping.

         (iii)  Where the training is terminated due to any reason other than the scheduled completion of the training, the period between such termination and deputation of another trainee-officer at the next port of call in India provided the tonnage tax company has given notice to the Director General of Shipping within 30 days of such termination.

12.   (i) The tonnage tax company shall intimate the Director General of Shipping about the scheduled period of training in respect of each of the trainee-officers and the Qualifying Ship(s) on which he would be deployed, within 30 days of the start of training and any change therein, within fifteen (15) days.

(ii) The tonnage tax company shall intimate the Director General of Shipping about the actual period of training as well as the Qualifying Ship(s) on which each trainee-officer was deployed within 30 days of the date of completion of training.

13.   The tonnage tax company shall furnish an annual return to the Director General of Shipping within 45 days of the end of the financial year, providing the following details

          (a)  The calculation of its minimum training requirement for the financial year in accordance with Explanation (c) to clause (1);

          (b)  The period for which it has actually imparted training supported by a summary of the man-days of training with respect of each of the trainee-officer;

          (c)  The period of which it is deemed as imparting the training under clause 11;

          (d)  The shortfall, if any, in meeting its minimum training requirement;

          (e)  The shortfall, to be carried-forward, if any, under clause 15(i) to the subsequent financial year; and

          (f)  The shortfall for which payment has to be made under clause 15(ii)/clause 16.

14.   (i) Where the Director General of Shipping is not satisfied with the details submitted in the annual return in accordance with clause 13, he shall serve on the tonnage tax company a notice requiring it to produce within such time, not being less than 30 days and not being more than 60 days, any particulars specified therein and shall provide an opportunity of hearing to the tonnage tax company.

However, in case of any mis-reporting by companies on this account Directorate General of Shipping shall have the right to reopen and reinvestigate the case and take necessary action as deemed fit.

(ii) After hearing such evidence and after taking into account such particulars as the tonnage tax company may produce, the Director General of Shipping shall determine the compliance by the tonnage tax company of the training requirements and shall issue a certificate stating whether or not the tonnage tax company has complied with the training requirements in respect of the relevant financial year and in case of non-compliance, specifying the number of days of shortfall in meeting the minimum training requirement to be carried forward to the subsequent financial year and the number of days of shortfall in relation to which additional payment may be payable in accordance with clause (15)/clause (16).

15.   (i) In case of a shortfall in meeting the minimum training requirement by a tonnage tax company for any financial year is upto twenty five per cent of the minimum requirement, the number of days of such shortfall shall be carried-forward to the subsequent financial year.

(ii) In case of a shortfall in meeting the minimum training requirement by a tonnage tax company exceeding twenty-five per cent of the minimum training requirement for any financial year, the tonnage tax company shall pay to the Trust 15 times the training fees that the Trust would have received from trainee-officers, if there was no shortfall in lieu of the obligation for training.

(iii) The tonnage tax company shall be liable to pay simple interest at one per cent for every month or part of a month comprised in the period commencing from the day immediately following the expiry of 30 days from the date of receipt of the order under sub-rule (ii) and ending with the day on which such penalty payment is made.

ExplanationFor the purpose of these Guidelines, any shortfall in meeting the minimum training requirement brought forward from any preceding financial years shall not be considered for calculating twenty-five per cent of the minimum training requirement.

16.   In the event that the tonnage tax company is not in a position to meet any training requirement by virtue of the type of vessels it owns or its trading pattern, such tonnage tax company shall pay ten (10) times such training fees that the Trust would have received from trainee-officers, if they had been accepted for training, in addition to the administrative cost to the Trust in lieu of their obligation hereunder. The Directorate General of Shipping shall on the merit of each case grant exemption to the Tonnage Tax Company on not being able to meet the minimum training requirement and opt to pay fees as provided hereunder, in lieu of training.

17.   Training requirements under these guidelines shall be applicable from 1-1-2005. The requirement would be proportional to the balance period of the financial year. If any shipping company has already accepted trainees, the continuance of such trainee-officers, after 1-1-2005, may be accepted as a compliance under these guidelines, provided that the administrative charges and fees payable from 1-1-2005 is paid by the trainee-officers and the tonnage tax company on or before 31-1-2005.

18.   The Director-General of Shipping after giving notice in writing of not less than ten days to the tonnage tax company, can examine the records of such tonnage tax company to verify that the information given in relation to the annual return is correct. The tonnage tax company shall make provision for a suitable system to enable and to facilitate the checking of its records and documentation.

Note: The Director General of Shipping will notify the further circular/instructions on other relating aspects including various forms and describing the system for administering the minimum training requirements by tonnage tax companies separately.