CBDT notifies new income-tax rules for non-resident cruise ship operators

As a measure to promote investment and employment, the Finance Act, 2024, introduced a presumptive taxation regime for non-residents engaged in the business of operating cruise ships. Additionally, an exemption has been provided for income of a foreign company from lease rentals of cruise ships, received from a related company operating such ships in India. The applicability of this presumptive taxation regime is subject to prescribed conditions, which include the requirement that the passenger ship being operated must have a carrying capacity of more than 200 passengers or a length of 75 meters or more, be used for leisure and recreational purposes, and have appropriate dining and cabin facilities for passengers.

The ship being operated must also be on a scheduled voyage or shore excursion, touching at least two sea ports in India or the same sea ports in India twice. Furthermore, the ship must be primarily for passenger transport, not for cargo. Additionally, the ship must be operated according to the procedures and guidelines issued by the Ministry of Tourism or Ministry of Shipping.

These amendments were proposed in the Union Budget to promote the cruise-shipping industry and make India an attractive cruise tourism destination by attracting global tourists and popularizing cruise shipping with domestic tourists.

The Centre has also launched a five-year Cruise Bharat Mission, aiming to boost cruise tourism in India with a target of 1 million passengers and the creation of 400,000 jobs by 2029. The mission includes setting up a dedicated fund, easing cabotage regulations, and offering financial incentives.

Union Minister for Ports, Shipping, and Waterways Sarbananda Sonowal stated at the time of the launch that cruise shipping has tremendous potential in the country, but it has remained unexplored for a long time.