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CBDT Notifies Conditions for Applicability of Presumptive Taxation Regime for Non-Resident Cruise Ship Operators under Finance (No. 2) Act, 2024

In a significant move aimed at bolstering the cruise tourism industry in India, the Central Board of Direct Taxes (CBDT) has introduced a presumptive taxation regime under the Finance (No. 2) Act, 2024. This new framework is designed specifically for non-resident cruise ship operators and seeks to simplify tax compliance while promoting investment in India’s burgeoning cruise tourism sector.

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The amendments, effective from April 1, 2025, are applicable for the assessment year 2025-26 and beyond.The initiative underscores the Indian government’s commitment to making the country an attractive destination for international cruise operators, thereby fostering economic growth and generating employment opportunities.

Key Features of the Presumptive Taxation Regime.

The presumptive taxation regime for non-resident cruise ship operators introduces several notable provisions:

  • Deemed Profits: Under Section 44BBC of the Income Tax Act, 20% of the aggregate receipts from the carriage of passengers will be deemed as profits and gains from the business of operating cruise ships.
  • Exemption for Lease Rentals: Income derived by foreign companies from lease rentals is exempt if both entities (the lessor and lessee) belong to the same holding company.
  • Exclusion from Section 44B: The new provisions specifically exclude cruise ship operations from the existing presumptive taxation framework under Section 44B, which applies to non-resident shipping businesses.
  • Operational Guidelines: Non-resident operators must comply with specific conditions related to vessel size, voyage routes, and adherence to guidelines issued by India’s Ministry of Tourism and Ministry of Shipping.

The Table Below Provides a Summary of Key Conditions for Eligibility:

ConditionRequirement
Vessel SpecificationsMinimum 200-Passenger Capacity or Length Exceeding 75 Meters with Dining/cabin Facilities
Voyage RoutesMust Include at Least Two Indian Seaports or Return to The Same Port Twice
Type of OperationsPrimarily Passenger Transport; Cargo Operations Excluded
ComplianceAdherence to Tourism/shipping Ministry Guidelines
Implications for Non-Resident Cruise Ship Operators.

Simplified Tax Compliance.

The Presumptive Taxation Regime Simplifies Tax Calculations by Deeming a Fixed Percentage (20%) of Gross Receipts as Taxable Income. This Eliminates the Need for Complex Bookkeeping and Detailed Profit-And-Loss Assessments.

Boost to Cruise Tourism.

By Offering Tax Incentives and Exemptions, Such as Those on Intra-Group Lease Rentals until Fy 2030-31, the Government Aims to Attract Global Players in The Cruise Industry. This Move Is Expected to Enhance India’s Appeal as A Global Cruise Tourism Hub.

Encouragement for Investment.

The Introduction of This Regime Aligns with Broader Reforms in Ownership, Leasing, and Flagging Policies Within India’s Shipping Sector. These Measures Are Designed to Encourage International Operators to Invest in Indian Waters.

Example Scenarios.

To Illustrate how This Regime Works:

  1. Operator A, a Non-Resident Cruise Company, Earns ₹50 Crore in Gross Receipts from Passenger Services in India. Under Section 44 Bbc, ₹10 Crore (20% of ₹50 Crore) Will Be Deemed as Taxable Income.
  2. If Operator a Also Leases Vessels from Its Parent Company Abroad, Such Lease Income Will Be Exempt from Tax Provided Both Entities Share a Common Holding Company.

Broader Economic Impact.

The Presumptive Taxation Framework Is Part of A Larger Strategy to Promote Sustainable Growth in India’s Tourism Sector. by Reducing Administrative Burdens and Offering Financial Incentives, It Is Anticipated that More International Cruise Operators Will Enter the Indian Market. This Could Lead to Increased Foreign Exchange Earnings, Job Creation in Coastal Regions, and Greater Exposure for Indian Ports on Global Maritime Routes.

Frequently Asked Questions (FAQs).

What Is the Purpose of Introducing This Presumptive Taxation Regime?

The Regime Aims to Simplify Tax Compliance for Non-Resident Cruise Ship Operators While Promoting Investment in India’s Cruise Tourism Sector.

Who Is Eligible Under This Regime?

Non-Resident Entities Engaged in Passenger Transportation Through Cruise Ships that Meet Specified Conditions Regarding Vessel Size, Voyage Routes, and Operational Guidelines Are Eligible.

When Do These Provisions Come Into Effect?

The Provisions Take Effect on April 1, 2025, and Apply to Income Earned During Fy 2024-25 Onwards.

How Does This Differ from Section 44 B?

Section 44 B Applies Broadly to Non-Resident Shipping Businesses but Excludes Cruise Ship Operations Under This New Framework. Section 44 Bbc Specifically Addresses Cruise Ship Operators with Tailored Conditions and Benefits.

What Are the Benefits for International Operators?

Benefits include simplified tax calculations (20% deemed profit), exemptions on certain lease rentals until FY 2030-31, and streamlined compliance requirements.In conclusion, the CBDT’s notification marks a pivotal step towards transforming India into a premier destination for global cruise tourism. By fostering an investor-friendly environment through tax reforms and operational incentives, this initiative holds immense potential for economic growth and industry development.


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Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.

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