The income tax department has started issuing notices to the merchant navy personnel, seeking them to pay taxes on behalf of the money earned in the duration of work on Indian or foreign vessels. Till date, the merchant navy personnel didn’t pay their taxes in India and enjoyed all the benefits similar to non-resident Indians. The notice started to circulate when the June judgment of an income tax tribunal in Kolkata suggested that the merchant navy personnel are eligible to pay their taxes in India.
Reportedly, the judgment of the Kolkata income tax tribunal will affect around one lakh seafarers who will have to pay 30 percent tax on their earned income. Also, the things can go worse as the revenue department may also raise the tax demand for the last 6 years of their total income. Moreover, Maritime Union of India (MUI) and National Union of Seafarers of India (NUSI), two seafarers’ associations are looking forward to challenge the tax tribunal’s judgment. According to the email sent by the unions to their members,”If this judgment 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.”
The order came from the Kolkata tribunal order over the appeal filed by Tapas Bandopadhyay against an order initiated by the deputy director of income tax in Kolkata. The tribunal stated that any part of income received in India is liable to go for taxable except in any case of double taxation avoidance agreement (DTAA).
There is an agra bench judjement that no tax is payable by nri ship crew members working in international territorial water