The proposed expansion of the tonnage tax scheme in the new Income Tax Bill of 2025 could benefit domestic shipping companies. This relaxation is aimed at improving the cash flow and viability of both inland and coastal shipping operations. Under the special provisions related to income of shipping companies, the tonnage tax business will be treated as a separate entity distinct from other activities conducted by a company. Companies opting for this scheme will be granted a 10-year lock-in period, exempting them from corporate tax during this timeframe.
The bill also seeks to extend the tonnage tax regime to Indian inland vessels registered under the Inland Vessels Act of 2021. Previously, this regime only applied to Indian ships registered under the Merchant Shipping Act of 1958. This extension could open up new opportunities for domestic shipping firms and further enhance the industry’s growth prospects.
Overall, the new tonnage tax law promises significant gains for domestic shipping companies by providing tax exemptions and operational advantages. If approved, this expansion could help boost the competitiveness and sustainability of the shipping sector in India. Industry experts believe that these changes could positively impact the financial health and profitability of shipping companies, leading to a more robust and dynamic maritime industry in the region.
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