SPECIAL PROVISIONS RELATING TO INCOME OF SHIPPING COMPANIES
In this Chapter, unless the context otherwise requires,—
(a) “bareboat charter” means hiring of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew;
(b) “bareboat charter-cum-demise” means a bareboat charter where the ownership of the ship is intended to be transferred after a specified period to the company to whom it has been chartered;
(c) “Director-General of Shipping” means the Director-General of Shipping appointed by the Central Government under sub-section (1) of section 7 of the Merchant Shipping Act, 1958 (44 of 1958);
(d) “factory ship” includes a vessel providing processing services in respect of processing of the fishing produce;
(e) “fishing vessel” shall have the meaning assigned to it in clause (12) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958);
(f) “pleasure craft” means a ship of a kind whose primary use is for the purposes of sport or recreation;
(g) “qualifying company” means a company referred to in section 115VC;
(h) “qualifying ship” means a ship referred to in section 115VD;
(i) “seagoing ship” means a ship if it is certified as such by the competent authority of any country;
(j) “tonnage income” means the income of a tonnage tax company computed in accordance with the provisions of this Chapter;
(k) “tonnage tax activities” means the activities referred to in sub-sections (2) and (5) of section 115V-I;
(l) “tonnage tax company” means a qualifying company in relation to which tonnage tax option is in force;
(m) “tonnage tax scheme” means a scheme for computation of profits and gains of business of operating qualifying ships under the provisions of this Chapter.
Amendment to Section 115V (Effective from April 1, 2026)
The following amendments have been made to Section 115V:
Modification in Key Clauses:
In clauses (a), (b), (f), and (h), the term “ship” has been replaced with “ship or inland vessel, as the case may be” to accommodate inland vessels under this section.
Insertion of New Clause:
A new clause (ea) has been added after clause (e):
“Inland Vessel” – The term inland vessel shall have the same meaning as defined in clause (q) of Section 3 of the Inland Vessels Act, 2021.
Conclusion
The amendment expands the scope of Section 115V to include inland vessels, ensuring a broader application of taxation provisions for shipping companies. With these changes, businesses engaged in inland waterway transport will now be subject to the same special provisions as those operating seagoing ships under the tonnage tax scheme.
This update aligns taxation rules with modern shipping operations, providing clarity and efficiency in tax computation for companies in the maritime sector.
Keywords: Section 115V, Income Tax Act 1961, shipping companies, tonnage tax, inland vessels, bareboat charter, tonnage income, qualifying company, seagoing ship, tax provisions for shipping companies.
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