New Rules On Tax-Free Status For Indian Seafarers


The government has issued guidelines regarding the new tax rules for seafarers working on ships so as to qualify them for non-resident status.  This would offer solution to the problem of sailors’ crunch to man their vessels.


The Central Board of Direct Taxes (CBDT) has issued a notification regarding the calculation of duration of stay of seafarers outside India.  According to the released notification, the calculation would be done from the date stamped on the seafarer’s identity document, continuous discharge certificate (CDC) till the date entered in the CDC at the time of signing off.  Hence, the stretch of time spent by a ship in Indian coastal waters can also be considered for calculating the non-resident status and the resultant tax concessions.

This new guideline would entitle the seafarers working on Indian registered ships to be considered at par with those working on foreign ships for the non-resident status.  The shipping ministry spokesman felt that this plan would give a big boost to Indian shipping.  Normally, seafarer working on Indian ships outside India for a period of 182 days or more in a year is considered to be a non-resident.  According to tax rules framed in 1990, if the seafarer has spent his time in Indian territorial waters, then that period would be considered as a period of service in India.

For instance, if an Indian ship is on route from India to Singapore, then it bypasses through various Indian ports like Nhava Sheva, Kochi, Kandla, etc.  Thus, the Indian ship remains in Indian coastal waters for quite some days before crossing the coastal boundaries of India.  In such situations, the number of days outside India of Indian crews working is calculated when the Indian ship crosses the coastal boundaries of India.  But, if an Indian crew is serving on foreign ships for 182 days or more, then it is treated as non-resident, irrespective of where the ship trades (including Indian waters).  This differential calculation led to a dissent in the personnel working with Indian ships.  This often resulted in the higher take-home pay packets without paying tax in India for the seafarers working with foreign-flag ships.

B.B. Sinha, Director, personnel and administration at Shipping Corporation of India Ltd felt that this new guideline would help the Indian ship owners to retain seafarers.  This would also lead to the decreased motivation among seafarers to join the foreign ships for getting non-resident status. Abdulgani Y. Serang, General Secretary, National Union of Seafarers of India (NUSI) felt this would help thousands of seafarers get non-resident status and reduce the experienced talent crunch, particularly in the officer’s category.  Arun Jaitley, Finance minister, tried to sort out this anomaly while presenting the Union budget for 2015-16.

Source: Livemint