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Maritime Forum

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TOPIC: Ambiguity in Personal Income tax guidelines for Indian Seafarers? Confusion among Indian Sailors

31 Jul 2014 07:37 #4307

  • Sengupta
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The Seafaring fraternity of India,was exuberent after getting news that there income generated as Wages in foreign flagged ships,will now be exempted from the Income Tax.

But lately it has been made clear by various Tax experts that,it does not mean that they do still need to complete 180 days out of Indian waters,as this exemption is meant for those who are having NRI status as per Income Tax Act of India.

I am quoting below an article from Taxassistindia.com for your reference with attached order from Income Tax Authority.

Wouldn’t you be shocked if you were to learn that as an NRI you are chargeable to 30% Income Tax in India?

Had the Income Tax Officers had their way, this is what would have happened. However the ITAT, which adjudicates tax matters, has in a recent judgment, saved thousands of NRI’s and Seafarers from paying taxes on their Overseas Salary Income being sent to India in their NRE Accounts.

In practice, most NRI’s and Seafarers have been getting their Salary, earned overseas, being remitted to their NRE account in India as most are aware that NRE account is tax free and the Income earned overseas is also tax free for an NRI.

However, numerous NRI’s and Seafarers have received shocking NOTICES from the Income Tax Department, for Laks of Rupees, imposing Income Tax on this remittance.

For eg: If you are an NRI, and you have sent your Salary earned overseas amounting to say Rs 80,00,000, to your NRE account in India, you would have received a Income Tax Notice for a tax payment of Rs 22,00,000 (at least, leaving out the penalties).

The IT Officer sending this Notice, relied on the clause in the Income Tax Act, which says “income received in India is taxable” for both a NRI and a Resident.

Numerous cases on the same matter are being fought by Individuals against the IT Department Notice that they may have received, in the High Court and even the Supreme Court.

However, the recent judgment by the ITAT, which adjudicates tax matters, is a big relief to tax payers and tax advisors alike.

The ITAT, has differentiated between “Income received” and “Amount received”. Quoting the ITAT “the connotation of an income having being received and an amount having being received are qualitatively different. The salary ‘Amount’ is received in India, but the salary ‘Income’ is received outside India”.

As per the order there is a distinguishing fact between “Income received in India” and “Amount received in India”. Hence if a NRI or a Seafarer is working overseas and maintains his NRI status for that particular year, then the Income earned overseas, even if received in the NRE account is Tax FREE. Hence, the Overseas Income of an NRI cannot be taxed in India if the services have been rendered outside India. The place of receipt of the payment is immaterial. However if the Income has been earned in India by the NRI then it will be liable to tax.

This is a very significant judgment by the ITAT, as had the judgment been reverse, then all NRI’s and Seafarers would have had to pay Income Tax in India and you would have received Notices for the past many years of due taxes.
Last Edit: 31 Jul 2014 07:39 by Sengupta.
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Income tax exemption for Seafarers in Indian Ships 29 Sep 2014 05:23 #4341

As per the reports of a Maritime News Magazine of India, the minister in-charge of Shipping, Mr. Gadkari, has told some Union Members (NUSI) that he would be trying his best to exempt Income tax for Indian seafarers, who works in Indian flagged ships.Now this demand by NUSI has been accepted by Government of India.

Even the coastal period of seafarers working on Indian flags ships which are going in foreign waters will now be considered as non-resident period. This will help more and more Indian seafarers get non-resident status without any difficulty. The whole period of service of foreign going Indian flag ships whether on the coast or in foreign waters will now be considered totally as period in foreign waters.
See this page of NUSI on the facebook.
www.facebook.com/nusi.org.in?hc_location=timeline
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Salary received in Indian Currency in Indian savings account by seafarer working abroad completing NRI tenure. 17 Jul 2016 14:55 #4591

  • Prashant Sharma
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Kindly advice if the salary is received in Indian Currency in Indian savings account by seafarer working abroad completing NRI tenure. What tax liability or exemption does he/she posess ?
Does he/she enjoys the tax exemption like when salary is credited in NRE account or not ?
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Indian seafarer tax liability 01 Aug 2016 06:20 #4608

  • TGR Kumar
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Good Morning
Can you please update after recent doubts circulating on the net and unions asking for information to file petition with tax authorities.
Regards
Kumar
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Income tax 01 Aug 2016 11:41 #4609

  • Rajeev
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Sengupta wrote:
The Seafaring fraternity of India,was exuberent after getting news that there income generated as Wages in foreign flagged ships,will now be exempted from the Income Tax.

But lately it has been made clear by various Tax experts that,it does not mean that they do still need to complete 180 days out of Indian waters,as this exemption is meant for those who are having NRI status as per Income Tax Act of India.

I am quoting below an article from Taxassistindia.com for your reference with attached order from Income Tax Authority.

Wouldn’t you be shocked if you were to learn that as an NRI you are chargeable to 30% Income Tax in India?

Had the Income Tax Officers had their way, this is what would have happened. However the ITAT, which adjudicates tax matters, has in a recent judgment, saved thousands of NRI’s and Seafarers from paying taxes on their Overseas Salary Income being sent to India in their NRE Accounts.

In practice, most NRI’s and Seafarers have been getting their Salary, earned overseas, being remitted to their NRE account in India as most are aware that NRE account is tax free and the Income earned overseas is also tax free for an NRI.

However, numerous NRI’s and Seafarers have received shocking NOTICES from the Income Tax Department, for Laks of Rupees, imposing Income Tax on this remittance.

For eg: If you are an NRI, and you have sent your Salary earned overseas amounting to say Rs 80,00,000, to your NRE account in India, you would have received a Income Tax Notice for a tax payment of Rs 22,00,000 (at least, leaving out the penalties).

The IT Officer sending this Notice, relied on the clause in the Income Tax Act, which says “income received in India is taxable” for both a NRI and a Resident.

Numerous cases on the same matter are being fought by Individuals against the IT Department Notice that they may have received, in the High Court and even the Supreme Court.

However, the recent judgment by the ITAT, which adjudicates tax matters, is a big relief to tax payers and tax advisors alike.

The ITAT, has differentiated between “Income received” and “Amount received”. Quoting the ITAT “the connotation of an income having being received and an amount having being received are qualitatively different. The salary ‘Amount’ is received in India, but the salary ‘Income’ is received outside India”.

As per the order there is a distinguishing fact between “Income received in India” and “Amount received in India”. Hence if a NRI or a Seafarer is working overseas and maintains his NRI status for that particular year, then the Income earned overseas, even if received in the NRE account is Tax FREE. Hence, the Overseas Income of an NRI cannot be taxed in India if the services have been rendered outside India. The place of receipt of the payment is immaterial. However if the Income has been earned in India by the NRI then it will be liable to tax.

This is a very significant judgment by the ITAT, as had the judgment been reverse, then all NRI’s and Seafarers would have had to pay Income Tax in India and you would have received Notices for the past many years of due taxes.
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Income Tax for Indian Seafarers 01 Aug 2016 13:58 #4610

  • admini
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In the WhatsApp group of Sailors Club, we received clippings of the Prominent News-Papers, and it seems that Seafarers has to loose those savings in the form of Income Tax.







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