Shipping business of non-residents
[Section-316 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 316(1) of Income Tax Act 2025
316(1) Irrespective of anything in the other provisions of this Act, the provisions of this section shall apply for the purpose of levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India.
Section 316(2) of Income Tax Act 2025
316(2) Where such a ship carries passengers, livestock, mail or goods shipped at a port in India,––
- (a) 7.5 % of the amount paid or payable on account of such carriage shall be deemed to be income accruing in India to the owner or charterer or to any person on his behalf, on account of such carriage, whether that amount is paid or payable in or out of India; and
- (b) the amount referred to in clause (a) shall include the amount paid or payable by way of demurrage charge or handling charge or any other amount of similar nature.
Section 316(3) of Income Tax Act 2025
316(3) Before the departure from any port in India of any such ship, the master of the ship shall prepare and furnish to the Assessing Officer a return of the full amount paid or payable to the person as mentioned in sub-section (2) on account of such carriage shipped at that port, since the last arrival of the ship thereat.
Section 316(4) of Income Tax Act 2025
316(4) The requirement of furnishing the return as per sub-section (3) shall be deemed to have been complied with, if––
- 316(4)(a) the Assessing Officer is satisfied that––
- (i) it is not possible for the master of the ship to furnish the return before the departure of the ship from the port; and
- (ii) the master of the ship has made satisfactory arrangements for filing of the return and payment of tax by any other person on his behalf; and
- 316(4)(b) the return is filed within thirty days of the departure of the ship by any person so authorised by the master.
Section 316(5) of Income Tax Act 2025
316(5) On receipt of the return, the Assessing Officer shall—
- (a) assess the income referred to in sub-section (2); and
- (b) determine the sum payable as tax thereon at the rate or rates in force applicable to the total income of a company which has not made the arrangements referred to in section 393(1) (Table: Sl. No. 7) and such sum shall be payable by the master of the ship.
Section 316(6) of Income Tax Act 2025
316(6) No order assessing the income and determining the sum of tax payable thereon shall be made under sub-section (5) after the expiry of nine months from the end of the tax year in which the return under sub-section (3) is furnished.
Section 316(7) of Income Tax Act 2025
316(7) For the purposes of determining the tax payable under sub-section (5), the Assessing Officer may call for such accounts or documents as he may require.
Section 316(8) of Income Tax Act 2025
316(8) A port clearance shall not be granted to the ship until the Commissioner of Customs, or other officer duly authorised to grant the same, is satisfied that the tax assessable under this section has been duly paid or that satisfactory arrangements have been made for the payment thereof.
Section 316(9) of Income Tax Act 2025
316(9) Nothing in this section shall prevent the owner or charterer of a ship from claiming, before the end of the year following the tax year in which the date of departure of the ship from Indian port falls, that an assessment be made of his total income of the tax year as per other provisions of this Act, and tax payable be determined on the basis of such assessment.
Section 316(10) of Income Tax Act 2025
316(10) In a case falling under sub-section (9), any payment made under this section during the tax year, if so claimed, shall be treated as––
- (a) tax paid in advance with respect to that year and adjusted against tax payable by such person; and
- (b) the difference between the sum so paid and the amount of tax found so payable by him on such assessment shall be paid by him or refunded to him.
FAQs on Section 316 of Income Tax Act 2025
What is the purpose of Section 316 of the Income Tax Act, 2025?
Section 316 provides a special mechanism for levying and recovering tax in respect of shipping businesses operated by non-residents when their ships carry passengers, livestock, mail, or goods from Indian ports.
To whom does Section 316 apply?
It applies to any ship that is owned or chartered by a non-resident and which carries passengers, livestock, mail, or goods shipped at a port in India.
What percentage of the amount received from carriage is deemed income under this section?
7.5% of the amount paid or payable for such carriage is deemed to be income accruing in India to the owner, charterer, or their representative.
Does the deemed income include charges other than basic freight?
Yes, it includes demurrage charges, handling charges, or any other similar amounts paid or payable.
Who is responsible for furnishing the return under this section?
The master of the ship must furnish a return of the full amount paid or payable for such carriage shipped from the port since the last arrival.
When must the return be furnished by the master of the ship?
Before the departure of the ship from any port in India.
Can the return be submitted after the ship’s departure?
Yes, if the Assessing Officer is satisfied that it’s not possible to file before departure and satisfactory arrangements are made for filing and tax payment by another person, the return can be filed within 30 days of departure.
What happens after the return is received by the Assessing Officer?
The Assessing Officer will assess the deemed income and determine the tax payable at rates applicable to a company not covered under section 393(1) (Table: Sl. No. 7), and the master of the ship is liable to pay the tax.
Is there a time limit for completing the assessment under this section?
Yes, the order assessing the income and determining tax must be made within nine months from the end of the tax year in which the return is furnished.
Can the Assessing Officer call for supporting documents?
Yes, the Assessing Officer may require accounts or documents necessary to determine the tax payable.
Can a ship obtain port clearance before payment of tax under this section?
No, port clearance will not be granted unless the Commissioner of Customs or authorised officer is satisfied that the tax has been paid or satisfactory arrangements have been made for payment.
Can the ship owner or charterer opt for regular assessment under other provisions?
Yes, the owner or charterer may, before the end of the year following the tax year of departure, request assessment of total income under other provisions of the Act.
What happens to payments made under Section 316 if regular assessment is opted for?
If claimed, any payment made under Section 316 during the tax year will be treated as advance tax and adjusted against the final tax liability. Any excess or shortfall will be refunded or payable accordingly.
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