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

Section 115VZB of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules. Provisions and rules related to Avoidance of tax.

Amended and updated notes on section 115VZB 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 Avoidance of tax.

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 115VZB of IT Act 1961-2020 provides for Avoidance of tax.

Recently, we have discussed in detail section 115VZA (Effect of temporarily ceasing to operate qualifying ships) of IT Act 1961. Today, we learn the provisions of section 115VZB of Income-tax Act 1961. The amended provision of section 115VZB 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 115VZB 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-115VZB: Avoidance of tax

Section 115VZB(1) of Income Tax Act

Subject to the provisions of this Chapter, the tonnage tax scheme shall not apply where a tonnage tax company is a party to any transaction or arrangement which amounts to an abuse of the tonnage tax scheme.

Section 115VZB(2) of Income Tax Act

For the purposes of sub-section (1), a transaction or arrangement shall be considered an abuse if the entering into or the application of such transaction or arrangement results, or would but for this section have resulted, in a tax advantage being obtained for—

  • (i) a person other than a tonnage tax company; or
  • (ii) a tonnage tax company in respect of its non-tonnage tax activities.

Explanation: For the purposes of this section, “tax advantage” include,—

(i) the determination of the allowance for any expense or interest, or the determination of any cost or expense allocated or apportioned, or, as the case may be, which has the effect of reducing the income or increasing the loss, as the case may be, from activities other than tonnage tax activities chargeable to tax, computed on the basis of entries made in the books of account in respect of the previous year in which the transaction was entered into; or

(ii) a transaction or arrangement which produces to the tonnage tax company more than ordinary profits which might be expected to arise from tonnage tax activities.


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