Better days are ahead for some 50,000 seafarers working on Indian flag ships, as the Government has agreed to change the norms of calculation of income-tax for them.
The new structure, once in place, will help seafarers posted on Indian flag ships save their entire income-tax liability. “The Finance Ministry has agreed, on a request from the Road Transport, Highways and Shipping Ministry, to calculate the days of non-residentship for seafarers posted on Indian flag ships from the date of embarkation from any Indian port,” a senior government official told BusinessLine.
A formal notification is expected soon. Currently, when a seafarer starts the journey, his/her days of non-residentship starts only from the date on which the ship starts sailing in foreign waters. For example, if a ship is going from JNPT in Mumbai to an African country, hopping at various ports in Karnataka, Goa and Kerala before venturing into international waters from Kochi, the days spent on the Indian coastline are not taken into consideration for granting non-resident status. Now, things will change.
Abdulgani Y Serang, General Secretary-cum-Treasurer of National Union of Seafarers of India (NUSI), said: “With the new guidelines, the period of coastal waters will also be taken into consideration in addition to the foreign water period. Earlier, only the foreign water period was taken for calculation of the NRI (non-resident Indian) status. The seafarers will not have to pay income-tax if during a financial year they are more than 183 days on board the foreign going Indian flag ship. This will mean a straight 30 per cent jump in savings for the seafarers.”
He hoped this would help Indian companies retain quality seafarers for Indian flag ships. Indian seafarers prefer to work on foreign flag ships, which give them better remuneration with no tax liability.
This is the second significant initiative in the shipping sector taken by the Modi Government. In July, the Government lifted restrictions on owning and operating foreign flag ships by Indian shipping lines. This enables any Indian company to register a ship in a foreign jurisdiction, yet operate those from here. This move is to attract foreign investments in the sector. It will also allow Indian shipping lines to operate foreign flag ships without setting up subsidiaries abroad, while the Government here can earn money through taxes.