Rule 146 — Rules related to application for exercising the option for tonnage tax scheme and other matters related to it. Made under s.227, s.228, s.231, s.232 of the Income-tax Act, 2025.
Rule 146 gives effect to Section 227, Section 228, Section 231 and Section 232 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
The rule collects five matters for the Tonnage Tax Scheme under Chapter XIII-G.
Clause (a) prescribes Form No. 80 for an application under section 231(1) to opt for the Tonnage Tax Scheme and for an application under section 231(10) to renew the option, to be verified as specified in the form.
Clause (b) prescribes how deemed tonnage under section 227(4)(b) is computed for two arrangements, by a Table: for the purchase of slots and slot charter, 2.5 teu equals 1 Net Tonnage, teu being a Twenty foot Equivalent Unit; and for the sharing of a break-bulk vessel, where cargo is restricted by volume, 19 cubic metres equals 1 net tonnage, and where cargo is restricted by weight, 14 metric tons equals 1 net tonnage.
Clause (c) lists the incidental activities referred to in section 228(7): maritime consultancy charges; income from loading or unloading of cargo; ship management fees or remuneration received for managed vessels; and maritime education or recruitment fees.
Clause (d) provides that the limit for charter-in of tonnage of qualifying ships referred to in section 232(15) to (20) during any tax year is computed by dividing the total number of chartered-in ton days by the total number of ton days operated by the company. Clause (e) prescribes Form No. 81 for the audit report of a qualified company required under section 232(21)(b).
The tonnage tax scheme taxes a shipping company on the tonnage of its ships rather than on its profits, so the Act has to be told how tonnage is counted where a company does not own the whole ship, and what counts as an incidental activity whose income stays inside the scheme. Section 227(4)(b), section 228(7) and section 232(15) to (20) each leave a piece of that to be prescribed. The rule supplies the conversion bases, the list of incidental activities and the formula for the charter-in limit, and prescribes the forms for opting in, renewing and reporting.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Deemed tonnage for purchase of slots and slot charter | 2.5 teu = 1 Net Tonnage (1 nt) | Teu is a Twenty foot Equivalent Unit, that is, a container of that size | Clause (b), Table Sl. No. 1 |
| Deemed tonnage for sharing of a break-bulk vessel where cargo is restricted by volume | 19 cubic metres = 1 net tonnage (1 nt) | Applies only where the cargo is restricted by volume | Clause (b), Table Sl. No. 2(i) |
| Deemed tonnage for sharing of a break-bulk vessel where cargo is restricted by weight | 14 metric tons = 1 net tonnage (1 nt) | Applies only where the cargo is restricted by weight | Clause (b), Table Sl. No. 2(ii) |
| Charter-in limit computation | Total number of chartered-in ton days divided by the total number of ton days operated by the company | For the limit referred to in section 232(15) to (20) during any tax year; the rule prescribes the method of computation, and the limit itself is in those sub-sections | Clause (d) |
Clause (d) gives the method, not the limit: the proportion of chartered-in ton days to ton days operated is how the limit referred to in section 232(15) to (20) is measured, and the permitted proportion itself is in those sub-sections, not in the rule. The conversion bases in clause (b) are not interchangeable — for a break-bulk vessel it depends on whether the cargo is restricted by volume or by weight, and applying the volume basis to weight-restricted cargo changes the tonnage and therefore the tax. The list of incidental activities in clause (c) is a closed list for section 228(7). One form covers both opting in and renewal, so the same Form No. 80 is used at the start and at renewal under section 231(10).
A shipping company purchases slot capacity equivalent to 5,000 teu during the tax year. Under entry 1 of the Table in clause (b), 2.5 teu equals 1 Net Tonnage, so the deemed tonnage is 2,000 nt. If it also shares a break-bulk vessel carrying weight-restricted cargo of 28,000 metric tons, entry 2(ii) converts that at 14 metric tons to 1 nt, giving a further 2,000 nt.
In Form No. 80 when the option for the Tonnage Tax Scheme is exercised or renewed, in the tonnage computation for the year, and in the Form No. 81 audit report a qualified company furnishes under section 232(21)(b).
2.5 TEU = 1 Net Tonnage (1 NT), where TEU is Twenty foot Equivalent Unit (Container of this size).
the limit for charter-in of tonnage of the qualifying ships referred to in section 232(15) to (20) during any tax year, shall be computed by dividing the total number of chartered-in ton days by the total number of ton days operated by the company