 "Shipping ministry seeks removal of duty on imported ships")
The shipping sector also wants to be removed from the negative list for service tax. Companies’ grouse is that they are unable to offset their input cost, as they cannot charge service tax currently.
The wish list of the ministry also includes, exemption from seafarer tax which is imposed on the personnel working on Indian flagged vessels. The ministry says these taxes have affected the competitiveness of the Indian shipping lines.
“We have to deduct this tax at the source. Indian seafarers do not pay this tax if they are on a foreign flagged vessel. This is a deterrent in providing us a level playing field,” said Anil Devli, CEO, Indian National Shipowners’ Association (INSA).
The income tax levied on Indian seafarers is borne by Indian shipping companies which according to INSA, results in a comparative disadvantage to Indian shipping companies vis-à-vis foreign companies.
From March 17, 2012 onwards CVD is payable on conversion of foreign ships for coastal voyages. Devli said, “Foreign companies pay this duty on contract value for coastal run while Indian companies pay on the value of the ships. There is no significant revenue gain to the government after claiming Cenvat credit.”
Besides, the shipping ministry is also pushing for infrastructure status for shipping sector with the Prime Minister’s Office and finance ministry. Currently, shipping comes under the services sector.
Indian shipping companies are making a case on this matter to promote shipping as the greener and cheaper source of transport in comparison to rail and roadways.
Also, shipping ministry is hopeful that this will help in securing long term and cheaper finance for acquisition of coastal vessels.