In order to facilitate sea cruise in India, Income Tax Department has prescribed conditions for non-resident to avail presumptive taxation regime. This is following budget announcement in July.
In her budget speech last July, Finance Minister Nirmala Sitharaman said: “There is tremendous potential for cruise tourism in India. To give a fillip to this employment generating industry, I am proposing a simpler tax regime for foreign shipping companies operating domestic cruises in the country.”
Accordingly, a presumptive taxation regime for a non-resident, engaged in the business of operation of cruise ships introduced by insertion of a new section 44BBC in the Income-tax Act, 1961 through Finance Act, 2024. Under this, 20 per cent of the aggregate amount received or receivable by or paid or payable to such assesse as profits and gains of such assesse from such business is presumed for tax calculation purpose.
Now, changes have been made in the Income Tax rules to prescribes conditions to facilitate presumptive tax. An assessee, being a non-resident, engaged in the business of operation of cruise ships will operate a passenger ship having a carrying capacity of more than 200 passengers or length of 75 meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers.
Such ship is being operated on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice. The ship will be used primarily for carrying passengers and not for carrying cargo. Such a ship need to be operated as per the procedure and guidelines, issued by the Ministry of Tourism or Ministry of Shipping.
Cruise Bharat Mission was launched on September 30, 2024 with the aim to provide whole of government approach by involving various Central and State Government agencies. Currently, six Major Ports have cruise Terminals.
These are Vishakhapatnam Port in Andhra Pradesh, Mormugao Port in Goa, New Mangalore Port in Karnataka, Cochin Port in Kerala, Mumbai Port in Maharashtra &Chennai Port in Tamil Nadu. The mission targets increasing sea cruise tourists to 10 lakh by 2029.
Apart from presumptive taxation, exemption to income of a foreign company from lease rentals has been provided up to assessment year 2030-31, by insertion of a new clause (15B) in section 10 of the Income Tax Act provided if such foreign company and the non-resident cruise ship operator have the same holding company. These provisions are effective from April 1, 2025.
