The Hindu Business Line : Coastal, inland vessel owners feel the heat over tonnage tax

As the introduction of tonnage tax follows withdrawal of the benefit under Section 33 AC that was extended to sea-going vessels, the coastal and inland water operators will now have to pay the hefty corporate tax, which will make a significant dent on their bottomlines. These operators have taken up the issue with the Shipping Ministry, which is likely to put forward their plea to the Finance Ministry.

Section 115 VD of the Finance Bill states that, "For the purpose of this chapter (on Tonnage Tax), a qualifying ship means any seagoing ship or vessel of 15 net tonnage or more, which is registered under the Merchant Shipping Act of 1958." Thus, inland vessels of various types registered under Coasting Vessels Act of 1838 and the Inland Vessels Act of 1917 do not qualify for tonnage tax, although these vessels had been getting the same Section 22 AC benefits as vessels registered under MS Act.

Mr S.K. Shahi, Chairman and Managing Director of SKS (Ship) Ltd, said: "Inland vessels cannot be isolated as these are also engaged in shipping service. Prior to Independence, the British implemented the Coasting Vessels and Inland Vessel Act, and since then the Indian vessels have been registered under these Acts. The inland and coastal vessels have become part and parcel of Indian shipping and operating as per the norms laid down by Directorate General of Shipping and MMD, though registered under different Acts."

A senior official of Mumbai-based Raj Shipping Agencies Ltd adds: "As we were extended the benefits under Section 33 AC on par with other shipping companies, we could expand our fleet by utilising the reserves and extend our services all along the Indian coast. The supplementary services of these inland vessels are vital for the growth of maritime trade of the country."

Industry estimates put the number of barges operating along the Indian coast at about 200, apart from the inland water vessels. These companies are surprised that the Government, on one hand, has been keen on developing these modes of transportation, while, on the other, it chose to isolate these vessels from the larger ocean-going vessels.

"This has to be seen in the context of the Government's plans to develop minor port. Without providing incentives to vessels registered under the Coasting Vessels and Inland Vessels Acts, you cannot have a strong minor port segment," said Mr Shahi.

In the light of this, the coastal and inland water vessel owners have sought either continuation of the benefits under Section 33 AC or extending of the tonnage tax scheme for these vessels.