Merchant navy personnel may have to pay taxes on income

MUMBAI: The income tax department has begun slapping notices on merchant navy personnel, asking them to pay taxes on income earned from working on either Indian or foreign vessels. Until now, merchant navy personnel enjoyed benefits similar to non-resident Indians and did not pay taxes in India. The notices have started pouring in after a June judgment of an income tax tribunal in Kolkata, which held that merchant navy personnel must pay taxes in India.

Although a Kolkata income tax tribunal judgment, it has set a precedent and personnel across India would be impacted. The judgment is set to affect about 1 lakh seafarers--colloquially called shippi es--who may have to pay around 30% tax on their income.Worse still, the revenue department can raise a tax demand on their last six years' income. Two seafarers' associations--Maritime Union of India (MUI) and National Union of Seafarers of India (NUSI) --are planning to challenge the tax tribunal's decision. “If this judgement is not challenged, then it will snatch away the income tax benefits presently received by thousands of seafarers working on Indian or foreign flag ships. This will lead to payment of heavy income tax on the whole income even when the seafarer is non-resident whether on Indian or foreign flag ships,“ said an email sent by the unions to their members. Email queries to MUI and NUSI did not elicit any response till press time.

The Kolkata tribunal order came on an appeal filed by Tapas Bandopadhyay against an order issued by the deputy director of income tax in Kolkata. The tribunal ruled that any income received in India is taxable except in cases where there is a double taxation avoidance agreement (DTAA), which was not the case here.