Moreover, the profit on sale of ships will be outside the purview of tonnage tax, and hence cannot set it off against our accumulated losses, he said. Chowgule Steamships has written off its accumulated losses from Rs 10 crore to just over Rs 3 crore in the past four years. However, the rest of the Indian shipping firms are set to opt for the tonnage tax regime.
RSM & Co senior partner Ketan Dalal said, "The window available to an existing qualifying company to opt for the tonnage tax regime is between October 1, 2004 to December 31 2004. Accordingly, if such an existing company does not decide within this three-month period then it would be subject to the normal corporate tax regime."
Tonnage tax is a system that charges taxes on the basis of shipping tonnage under control rather than actual profits earned. Since tonnage tax is independent of actual book profits made by the company and is instead dependent on tonnage under control, the company might end up paying taxes even during periods of losses. The tonnage tax legislation with a few amendments was passed last week as part of the Finance bill, paving way for tonnage tax regime in India.
Earlier, Indian National Shipowners Association (INSA) had raised concerns over the clarity on issues pertaining to qualifying ships and the inchartering foreign flag vessels. However, Mr Dalal said, "The amendment has now allowed shipping companies to have their main object as carrying on the business of operating ships as against operating qualifying ships proposed in the bill. This would enable more companies to participate in the tonnage tax scheme."