Shipping ministry seeks choice between tonnage & corporate tax

New Delhi, January 21: | Updated: Jan 22 2002, 05:30am hrs
The shipping ministry has asked the finance ministry to offer a choice between tonnage tax and corporate tax to domestic shipping companies. This is based on the report of Rakesh Mohan committee on tonnage tax, which was submitted to shipping minister Vedprakash P Goyal on Sunday.

Mr Goyal met finance minister Yashwant Sinha on Monday for a pre-Budget meeting and presented the report to him. The choice is being proposed to replace the present regime of corporate tax.

Speaking to The Financial Express, Mr Goyal said that another major recommendation of the committee, on seafarers on Indian flag vessels getting same benefit as those presently available to foreign vessels, was also conveyed to Mr Sinha.

The pre-Budget meeting was attended by economic advisor to finance minister Rakesh Mohan.

Stating that the forthcoming Budget would certainly be good for the shipping sector, he said that introduction of tonnage tax was a long-standing demand of the industry.

He also said that the issue of boosting coastal shipping was also discussed during the meeting.

On inland water transport, the shipping ministry requested the finance ministry for granting speedy clearance to the Inland Waterways Authority of India for seeking loan from the World Bank and the Asian Development Bank.

Mr Goyal said that a case for offering fiscal incentives to companies entering the IWT sector was also made before the finance minister.

The Sethusamundran project also came up for discussion during the meeting. It was felt that the project was too big and should be broken into smaller projects for speedy implementation.

The finance ministry, which has been opposed to the new tax regime in shipping, since it implies a loss of about Rs 100 crore earned by the exchequer from corporate tax in the shipping sector, is now likely to announce the new mix tax regime.

The ministry of disinvestment had also recently joined hands with the shipping ministry to press for tonnage tax regime since it would give a fillip to disinvestmenet in the Shipping Corporation of India (SCI), the biggest shipping company in the country.

The disinvestment ministry has invited expression of interest for offloading 51 per cent stake in SCI the last date for which is February 18. If the finance ministry decides to switch-over over to the tonnage tax regime, the selloff ministry expects a good price.

Since the announcement on tonnage tax is only likely to come in the Budget 2002-03, the government is trying to give favourable signals before.