Income Tax Act, 2025
Section 1: Subs. by Act 23 of 2012, s. 58, for the Table (w.e.f. 12013).
1. Subs. by Act 23 of 2012, s. 58, for the Table (w.e.f. 12013).
514
(2) Subject to the provisions of sub-section (1), where two or more companies are operators of a
qualifying ship, the tonnage income of each company shall be computed as if each had been the only
operator.
115VI. Relevant shipping income.—(1) For the purposes of this Chapter, the relevant shipping
income of a tonnage tax company means—
(i) its profits from core activities referred to in sub-section (2);
(ii) its profits from incidental activities referred to in sub-section (5):
Provided that where the aggregate of all such incomes specified in clause (ii) exceeds
one-fourth per cent of the turnover from core activities referred to in sub-section (2), such excess shall not
form part of the relevant shipping income for the purposes of this Chapter and shall be taxable under the
other provisions of this Act.
(2) The core activities of a tonnage tax company shall be—
(i) its activities from operating qualifying ships; and
(ii) other ship-related activities mentioned as under:—
(A) shipping contracts in respect of—
(i) earning from pooling arrangements;
(ii) contracts of affreightment.
Explanation.—For the purposes of this sub-clause,—
(a) “pooling arrangement” means an agreement between two or more persons for providing
services through a pool or operating one or more ships and sharing earnings or operating profits
on the basis of mutually agreed terms;
(b) “contract of affreightment” means a service contract under which a tonnage tax company
agrees to transport a specified quantity of specified products at a specified rate, between
designated loading and discharging ports over a specified period;
(B) specific shipping trades, being—
(i) on-board or on-shore activities of passenger ships comprising of fares and food and
beverages consumed on board;
(ii) slot charters, space charters, joint charters, feeder services, container box leasing of
container shipping.
(3) The Central Government, if it considers necessary or expedient so to do, may, by notification in
the Official Gazette, exclude any activity referred to in clause (ii) of sub-section (2) or prescribe the limit
up to which such activities shall be included in the core activities for the purposes of this section.
(4) Every notification issued under this Chapter shall be laid, as soon as may be after it is issued,
before each House of Parliament, while it is in session for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both Houses agree in making any
modification in the notification, or both Houses agree that the notification should not be issued, the
notification shall thereafter have effect only in such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that notification.
515
(5) The incidental activities shall be the activities which are incidental to the core activities and which
may be prescribed for the purpose.
(6) Where a tonnage tax company operates any ship, which is not a qualifying ship, the income
attributable to operating such non-qualifying ship shall be computed in accordance with the other
provisions of this Act.
(7) Where any goods or services held for the purposes of tonnage tax business are transferred to any
other business carried on by a tonnage tax company, or where any goods or services held for the purposes
of any other business carried on by such tonnage tax company are transferred to the tonnage tax business
and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the tonnage
tax business does not correspond to the market value of such goods or services as on the date of the
transfer, then, the relevant shipping income under this section shall be computed as if the transfer, in
either case, had been made at the market value of such goods or services as on that date:
Provided that where, in the opinion of the Assessing Officer, the computation of the relevant shipping
income in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may
compute such income on such reasonable basis as he may deem fit.
Explanation.—For the purposes of this sub-section, “market value”, in relation to any goods or
services, means the price that such goods or services would ordinarily fetch on sale in the open market.
(8) Where it appears to the Assessing Officer that, owing to the close connection between the tonnage
tax company and any other person, or for any other reason, the course of business between them is so
arranged that the business transacted between them produces to the tonnage tax company more than the
ordinary profits which might be expected to arise in the tonnage tax business, the Assessing Officer shall,
in computing the relevant shipping income of the tonnage tax company for the purposes of this Chapter,
take the amount of income as may reasonably be deemed to have been derived therefrom.
Explanation.—For the purposes of this Chapter, in case the relevant shipping income of a tonnage tax
company is a loss, then, such loss shall be ignored for the purposes of computing tonnage income.
Subject to the provisions of sub-section
For the purposes of this Chapter, the relevant shipping
income of a tonnage tax company means—
its profits from core activities referred to in sub-section
its profits from incidental activities referred to in sub-section
exceeds
one-fourth per cent of the turnover from core activities referred to in sub-section
The core activities of a tonnage tax company shall be—
its activities from operating qualifying ships; and
other ship-related activities mentioned as under:—
shipping contracts in respect of—
earning from pooling arrangements;
contracts of affreightment.
Explanation.—For the purposes of this sub-clause,—
“pooling arrangement” means an agreement between two or more persons for providing
services through a pool or operating one or more ships and sharing earnings or operating profits
on the basis of mutually agreed terms;
“contract of affreightment” means a service contract under which a tonnage tax company
agrees to transport a specified quantity of specified products at a specified rate, between
designated loading and discharging ports over a specified period;
specific shipping trades, being—
on-board or on-shore activities of passenger ships comprising of fares and food and
beverages consumed on board;
slot charters, space charters, joint charters, feeder services, container box leasing of
container shipping.
The Central Government, if it considers necessary or expedient so to do, may, by notification in
the Official Gazette, exclude any activity referred to in clause
of sub-section
or prescribe the limit
up to which such activities shall be included in the core activities for the purposes of this section.
Every notification issued under this Chapter shall be laid, as soon as may be after it is issued,
before each House of Parliament, while it is in session for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both Houses agree in making any
modification in the notification, or both Houses agree that the notification should not be issued, the
notification shall thereafter have effect only in such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that notification.
515
The incidental activities shall be the activities which are incidental to the core activities and which
may be prescribed for the purpose.
Where a tonnage tax company operates any ship, which is not a qualifying ship, the income
attributable to operating such non-qualifying ship shall be computed in accordance with the other
provisions of this Act.
Where any goods or services held for the purposes of tonnage tax business are transferred to any
other business carried on by a tonnage tax company, or where any goods or services held for the purposes
of any other business carried on by such tonnage tax company are transferred to the tonnage tax business
and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the tonnage
tax business does not correspond to the market value of such goods or services as on the date of the
transfer, then, the relevant shipping income under this section shall be computed as if the transfer, in
either case, had been made at the market value of such goods or services as on that date:
Provided that where, in the opinion of the Assessing Officer, the computation of the relevant shipping
income in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may
compute such income on such reasonable basis as he may deem fit.
Explanation.—For the purposes of this sub-section, “market value”, in relation to any goods or
services, means the price that such goods or services would ordinarily fetch on sale in the open market.
Where it appears to the Assessing Officer that, owing to the close connection between the tonnage
tax company and any other person, or for any other reason, the course of business between them is so
arranged that the business transacted between them produces to the tonnage tax company more than the
ordinary profits which might be expected to arise in the tonnage tax business, the Assessing Officer shall,
in computing the relevant shipping income of the tonnage tax company for the purposes of this Chapter,
take the amount of income as may reasonably be deemed to have been derived therefrom.
Explanation.—For the purposes of this Chapter, in case the relevant shipping income of a tonnage tax
company is a loss, then, such loss shall be ignored for the purposes of computing tonnage income.