India's Shipping Ministry asks Finance Ministry for tax incentives to help growth
The shipping ministry on Thursday said that the ministry has asked the Finance ministry for grants of various direct and indirect tax incentives for the growth of the shipping sector in the country.
The move comes at a time when the finance ministry had, in its budget, said that the shipping companies will have to pay higher tonnage tax after since the government increased the rate of daily tonnage income from the shipping companies, reported Economic Times.
" It has also been suggested to review the proposed change in the rate for computation of daily tonnage income. Since the tonnage tax is payable inspite of losses, such income tax liability remains a kind of fixed expenditure irrespective of profitability.", GK Vasan, Minister for shipping told the parliament.
Daily tonnage income is decided by the central government and it is a presumptive amount fixed by the government on the tonnage of the vessels. " This would mean higher out go of tax for shipping companies", B.K.Mandal, Director Finance, Shipping corporation of India had earlier told ET.
In absolute terms, the increase in the tonnage tax will not be significant as the companies pay only about 1.5% of their profit before tax and the increase in tonnage tax would mean that the companies will have to pay about 3% tax on their profit before tax, an analyst with a leading research firm said.
The move comes at a time when the freight rates are at historical lows in the drybulk trade and despite the rise in oil prices there has been no reciprocation in freight rates of tankers and offshore vessels.