The Hindu Business Line : 25 shipping cos opt for tonnage tax

NEARLY 25 companies, accounting for 85 per cent of the country's merchant ships, have opted to pay tonnage tax. As on December 31, the last day for filing applications, almost all major shipping companies hadsigned up for the new tax regime.

Going by the bumper profits reported by most shipping companies this year so far, they will be saving a large amount under the tax regime offered to the industry in the last Union Budget. This is because, in effect, these companies would be paying just 2 per cent to 3 per cent of their profit as tax, against the average 18 per cent corporate tax (after making all eligible deductions) that they have been paying until now.

An official with a top shipping line estimated the total savings for the industry at about Rs 200 crore-Rs 300 crore in the current year. Of course, this will depend on the freight market in the next three months.

The companies that have opted for tonnage tax include Great Eastern Shipping, Shipping Corporation of India, Varun Shipping, Essar Shipping and Tholani Shipping. These companies were given time from October to December to choose either tonnage tax or corporate tax.

According to industry sources, many companies are yet to get intimation from the tax department though they had applied in November. Shipping companies are also not clear about the calculation of charted fleet for assessing tonnage tax as the relevant notification is yet to be to issued, said a shipping company official. The Indian National Shipowners Association has taken up the issue with the tax department.

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25 shipping cos opt for tonnage tax

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