Day: February 15, 2025

Tax on income from venture capital investments: Income from venture capital companies or funds is taxed as if the investment was directly made in the venture.

Income distributed by a business trust to unit holders is taxed similarly to how it was received by the trust, with specific provisions for reporting and taxation.

Income distributed by a business trust to unit holders is taxed similarly to how it was received by the trust, with specific provisions for reporting and taxation.

Income from operating qualifying ships for tax year 2025-26 can be computed at the company’s option, deemed profits under “Profits and gains of business.”

Tonnage Tax Scheme u/s 226 of the Income Tax Act 2025 defines profit computation for companies operating qualifying ships and specifies conditions for eligibility.

The tonnage income of a company is calculated by the aggregate of each qualifying ship’s income. It depends on the ship’s tonnage and days operated, following specific rules.

Section 228 of the IT Act 2025 outlines the relevant shipping income of a tonnage tax company, including core and incidental activities, income exclusions, and asset depreciation rules.

Section 229 of the IT Act 2025 outlines depreciation and gains on tonnage tax assets. It defines the calculation of written-down values, asset allocation, and tax treatment of capital gains.

Section 230 of IT Act 2025 outlines exclusions for tonnage tax companies, such as disallowing loss carryforward, set off, deductions, and limiting depreciation adjustments.

A qualifying company can opt for the tonnage tax scheme by applying within three months of incorporation or qualification. Approval is granted or denied by the Joint Commissioner. The scheme lasts for 10 years, with conditions for cessation or renewal. Non-compliance leads to ineligibility for 10 years.

The Tonnage Tax Scheme requires companies to credit 20% of book profits to a reserve account, maintain separate books, comply with training requirements, and limit chartered ships.

Sections 233(1) to 233(6) of IT Act 2025 detail provisions for the tonnage tax scheme in cases of company amalgamation and demerger, outlining conditions for qualifying companies.