The Hindu Business Line : Panel for fiscal relief to shipping industry

The committee recommended provision of fiscal relief to Indian shipping firms to restore the competitiveness of Indian shipping industry. Admitting that the benefit of tonnage tax has been eroded by certain taxes which were introduced or the rates of which were increased after the introduction of tonnage tax, the group has stated.

It has called for relief on the issues that include service tax on services availed by ship owners, minimum alternate tax on profits from second-hand sale of vessels, corporate income tax on interest earnings, seafarers’ taxation on ECB and withholding tax on charter hire charges.

Indian entrepreneurs have been unwilling to add to their merchant fleet due to the unfavourable tax regime prevailing in the country compared with the other maritime nations, it said.

As a result, while the sea-borne trade of India has increased rapidly, the share of Indian ships in carriage of Indian cargo has fallen from 31.5 per cent in 1999-2000 to 13.7 per cent in 2005-06, the committee said.

It added, “The situation improved after tonnage tax regime was adopted from April 1, 2004, which induced impressive growth in the fleet strength from below seven million gross tonne (gt) on April 1, 2004, to over 9 million gt on October 1, 2007.

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