| According to shipping ministry officials, the companies would have the choice to either subject themselves to the tonnage tax regime or the normal corporate tax. |
| They also said that tonnage tax should be applicable only on income from shipping operations and not on other income streams from real estate, etc. |
| "Such ring-fencing of shipping income from other incomes will prevent companies from misusing the tax regime," an official said. |
| The whole issue of tonnage tax has been based on the fact that it would boost Indian tonnage, but there should be some way of ensuring that shipping companies under this tax regime devote some funds for capital investment, he added. |
| The companies opting for tonnage tax will also have certain training commitments. The draft contains various options on which the commitment could be based, the official said. |
| "It could be training a certain number of people, equivalent to a specified percentage of the number of offshore employees the company has. It could also be in terms of number of hours of on-the-board training provided by shipping companies, the hours varying with the number of vessels they possess," he said. |
| The draft states that the tonnage tax would be levied on notional income based on tonnage. The ministry official said that the rate has been so worked out that the ultimate burden would not be more than 1-2 per cent of the income. |
| Tonnage tax has been a major demand in the shipping industry and its introduction has been hanging for past five years. |
| "Introduction of tonnage tax would not only boost Indian tonnage but also stem the practice of Indians registering under foreign flags," the official said. |
| He added that it was a pity that despite100 per cent foreign direct investment being allowed in the shipping sector, there was a negligible inflow. One of the main reasons for this was an unfavourable tax regime, he said. |
Explore Business Standard