Amalgamation and demerger
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 233(1) of Income Tax Act 2025
233(1) Where there has been an amalgamation of a company with another company or companies, then, subject to the other provisions of this section, the provisions relating to the tonnage tax scheme shall, as far as may be, apply to the amalgamated company, if it is a qualifying company.
Section 233(2) of Income Tax Act 2025
233(2) Where the amalgamated company is not a tonnage tax company, it shall exercise an option for tonnage tax scheme under section 231(1) within three months from the date of the approval of the scheme of amalgamation.
Section 233(3) of Income Tax Act 2025
233(3) Where the amalgamating companies are tonnage tax companies, the provisions of this Part shall, as far as may be, apply to the amalgamated company for such period as the option for tonnage tax scheme which has the longest unexpired period continues to be in force.
Section 233(4) of Income Tax Act 2025
233(4) Where one of the amalgamating companies is a qualifying company as on the 1st October, 2004 and which has not exercised the option for tonnage tax scheme before the 1st January, 2005, the provisions of this Part shall not apply to the amalgamated company and the income of the amalgamated company from the business of operating qualifying ships shall be computed as per the other provisions of this Act.
Section 233(5) of Income Tax Act 2025
233(5) Where in a scheme of demerger, the demerged company transfers its business to the resulting company before the expiry of the option for tonnage tax scheme, then, subject to the other provisions of this Part, the tonnage tax scheme shall, as far as may be, apply to the resulting company for the unexpired period, if it is a qualifying company.
Section 233(6) of Income Tax Act 2025
233(6) The option for tonnage tax scheme in respect of the demerged company shall remain in force for the unexpired period of the tonnage tax scheme if it continues to be a qualifying company.
FAQs on Section 233 of Income Tax Act 2025
What is the impact of amalgamation on the tonnage tax scheme under Section 233(1)?
If a company is amalgamated with another, and the resulting amalgamated company is a qualifying company, then the provisions relating to the tonnage tax scheme shall, as far as may be, apply to the amalgamated company.
Is it mandatory for a non-tonnage tax amalgamated company to opt for the tonnage tax scheme?
Yes, if the amalgamated company is not a tonnage tax company, it must exercise an option for the tonnage tax scheme under Section 231(1) within three months from the date of approval of the amalgamation scheme.
What happens if the amalgamating companies were already under the tonnage tax scheme?
If both amalgamating companies are tonnage tax companies, the amalgamated company shall be governed by the tonnage tax scheme for the unexpired period of the option that has the longest duration.
Does the tonnage tax scheme apply if the amalgamating company had not opted for it by 1st January, 2005?
No, if one of the amalgamating companies was a qualifying company as of 1st October, 2004 but had not exercised the tonnage tax option before 1st January, 2005, the provisions of the tonnage tax scheme will not apply to the amalgamated company.
In case of a demerger, does the tonnage tax scheme apply to the resulting company?
Yes, if a demerged company transfers its business to a resulting company before the expiry of the tonnage tax option, and the resulting company is a qualifying company, the tonnage tax scheme shall apply to the resulting company for the unexpired period.
Will the demerged company retain its tonnage tax scheme option after demerger?
Yes, the demerged company will continue to be under the tonnage tax scheme for the unexpired period provided it remains a qualifying company.