Amended and updated notes on section 115VG of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to computation of tonnage income.
Chapter XIIG (Sections 115V to 115VZC) of the Income Tax Act 1961 deals with the provisions related to special provisions relating to income of shipping companies. Section 115VG of IT Act 1961-2023 provides for computation of tonnage income.
Recently, we have discussed in detail section 115VF (tonnage income) of IT Act 1961. Today, we learn the provisions of section 115VG of Income-tax Act 1961. The amended provision of section 115VG is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 115VG of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section-115VG: Computation of tonnage income
Section 115VG(1) of Income Tax Act
The tonnage income of a tonnage tax company for a previous year shall be the aggregate of the tonnage income of each qualifying ship computed in accordance with the provisions of sub-sections (2) and (3).
Section 115VG(2) of Income Tax Act
For the purposes of sub-section (1), the tonnage income of each qualifying ship shall be the daily tonnage income of each such ship multiplied by—
- (a) the number of days in the previous year; or
- (b) the number of days in part of the previous year in case the ship is operated by the company as a qualifying ship for only part of the previous year, as the case may be.
Section 115VG(3) of Income Tax Act
For the purposes of sub-section (2), the daily tonnage income of a qualifying ship having tonnage referred to in column (1) of the Table below shall be the amount specified in the corresponding entry in column (2) of the Table:
TABLE
| Qualifying ship having net tonnage | Amount of daily tonnage income |
|---|---|
| (1) | (2) |
| up to 1,000 | Rs. 70 for each 100 tons |
| exceeding 1,000 but not more than 10,000 | Rs. 700 plus Rs. 53 for each 100 tons exceeding 1,000 tons |
| exceeding 10,000 but not more than 25,000 | Rs. 5,470 plus Rs. 42 for each 100 tons exceeding 10,000 tons |
| exceeding 25,000 | Rs. 11,770 plus Rs. 29 for each 100 tons exceeding 25,000 tons. |
Section 115VG(4) of Income Tax Act
For the purposes of this Chapter, the tonnage shall mean the tonnage of a ship indicated in the certificate referred to in section 115VX and includes the deemed tonnage computed in the prescribed manner.
Explanation: For the purposes of this sub-section, “deemed tonnage” shall be the tonnage in respect of an arrangement of purchase of slots, slot charter and an arrangement of sharing of break-bulk vessel.
Section 115VG(5) of Income Tax Act
The tonnage shall be rounded off to the nearest multiple of hundred tons and for this purpose any tonnage consisting of kilograms shall be ignored and thereafter if such tonnage is not a multiple of hundred, then, if the last figure in that amount is fifty tons or more, the tonnage shall be increased to the next higher tonnage which is a multiple of hundred and if the last figure is less than fifty tons, the tonnage shall be reduced to the next lower tonnage which is a multiple of hundred; and the tonnage so rounded off shall be the tonnage of the ship for the purposes of this section.
Section 115VG(6) of Income Tax Act
Notwithstanding anything contained in any other provision of this Act, no deduction or set off shall be allowed in computing the tonnage income under this Chapter.