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Union Budget 2025-26 (Full) + Finance Bill, 2025
XI. Extension of benefits of tonnage tax scheme to inland vessels
Tonnage tax scheme in Chapter XII-G of the Act was brought vide Finance Act, 2004 in order to promote Indian shipping industry wherein the qualifying shipping companies were given the choice to opt for the tonnage tax regime or continue to remain within the normal corporate tax regime.
2. Representations were received to extend tonnage tax scheme to inland vessels to promote inland water transportation industry. It is stated that at present, India is short of inland water transport vessels fleet and require higher investments in the sector which is capital intensive. Therefore, to provide a boost to inland water transportation, it was represented to include inland vessels under the ambit of tonnage tax scheme.
3. Therefore, to promote inland water transportation in the country and to attract investments in the sector, it is proposed to extend the benefits of tonnage tax scheme to Inland Vessels registered under Inland Vessels Act, 2021. Accordingly inland vessels have been included in the section 115VD for being eligible to be a qualified ship. Further, inland vessels have been defined in section 115V of the Act in the same manner as provided in the Inland Vessels Act, 2021. Other corresponding amendments have been made to extend the tonnage tax scheme to inland vessels.
4. These amendment will take effect from the 1st day of April, 2026 and shall, accordingly, apply in relation to the assessment year 2026-27 and subsequent assessment years.
[Clauses 26, 27, 28, 29, 30, 31, 33, 34, 35 & 36]
Full Text:
Tonnage tax extension to inland vessels allows eligible inland ships to opt into the tonnage tax regime from AY 2026 27. Inland vessels registered under the Inland Vessels Act, 2021 are made eligible as qualified ships for the tonnage tax regime by aligning the income tax definition of inland vessels with that Act and by introducing corresponding amendments to extend tonnage tax benefits to inland vessels. The amendments are effective from 1 April 2026 and apply to the assessment year 2026 27 and subsequent assessment years. of Press 'Enter' after typing page number.
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