Section 115VP of Income Tax Act for AY 2023-24

Section 115VP of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules 1962. Method and time of opting for tonnage tax scheme.

Amended and updated notes on section 115VP 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 method and time of opting for tonnage tax scheme.

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 115VP of IT Act 1961-2023 provides for method and time of opting for tonnage tax scheme.

Recently, we have discussed in detail section 115VO (exclusion from provisions of section 115JB) of IT Act 1961. Today, we learn the provisions of section 115VP of Income-tax Act 1961. The amended provision of section 115VP 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 115VP 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-115VP: Method and time of opting for tonnage tax scheme

Section 115VP(1) of Income Tax Act

A qualifying company may opt for the tonnage tax scheme by making an application to the Joint Commissioner having jurisdiction over the company in the form and manner as may be prescribed, for such scheme.

Section 115VP(2) of Income Tax Act

The application under sub-section (1) may be made by any existing qualifying company at any time after the 30th day of September, 2004 but before the 1st day of January, 2005 (hereafter referred to as the “initial period”):

Provided that—

  • (i) a company incorporated after the initial period; or
  • (ii) a qualifying company incorporated before the initial period but which becomes a qualifying company for the first time after the initial period,

may make an application within three months of the date of its incorporation or the date on which it became a qualifying company, as the case may be.

Section 115VP(3) of Income Tax Act

On receipt of an application for option for tonnage tax scheme under sub-section (1), the Joint Commissioner may call for such information or documents from the company as he thinks necessary in order to satisfy himself about the eligibility of the company and after satisfying himself about such eligibility of the company to make such option for tonnage tax scheme, he—

  • (i) shall pass an order in writing approving the option for tonnage tax scheme; or
  • (ii) shall, if he is not so satisfied, pass an order in writing refusing to approve the option for tonnage tax scheme,

and a copy of such order shall be sent to the applicant:

Provided that no order under clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

Section 115VP(4) of Income Tax Act

Every order granting or refusing the approval of the option for tonnage tax scheme under clause (i) or clause (ii), as the case may be, of sub-section (3) shall be passed before the expiry of one month from the end of the month in which the application was received under sub-section (1).

Section 115VP(5) of Income Tax Act

Where an order granting approval is passed under sub-section (3), the provisions of this Chapter shall apply from the assessment year relevant to the previous year in which the option for tonnage tax scheme is exercised.


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