Govt plans changes in shipping taxes

It has asked that a tonnage tax scheme be devised and introduced to replace the corporate tax scheme. Tonnage tax is a lumpsum tax on the ship’s earning capacity based on the vessel’s tonnage capacity whereas corporate tax is charged on the domestic company’s earnings—a disadvantage vis-a-vis foreign firms who do not incur such a tax.

The new tax structure would be finalised between the ministries of Shipping and Finance within a fortnight of the CCS approval, says the proposal.

That would help augment coastal fleet by one million gross registered tonnage (GRT) in the next two to three years, it added. India accounts for seven million of the global shipping fleet of around 500 million GRT.

It said that future government policies should also be designed such that other ministries, specially Commerce and Petroleum, actively promote the use of Indian ships in their trade.

Effort should be to increase the share of Indian bottoms carrying Indian trade to 50 percent in the next five years. The proportion of India’s sea-borne trade carried by the domestic ships has been steadily decreasing and now stands between 27-30 percent, it added.

The proposal is likely to be taken up in the next meeting of the CCS, sources said.