Budget 2024 Proposed Changes to Presumptive Taxation for Non-Residents; Know More

As the Budget 2024 presented in the Parliament on 23rd July, the finance minister has proposed many changes to taxation and other sectors. Some Changes have been made in the income tax regime like an increment in the standard deduction limit, a hike in the interest rate on late payment of TCS, Changes in the slab rate of the new tax regime etc.

Here in the article, we’ll talk about one more change proposed by the government.

Promotion of Domestic Cruise Ship Operations by Non-Residents – Presumptive Taxation Proposed

Certain amendments have been proposed to promote the cruise shipping industry in India. The aim is to make India an attractive cruise tourism destination, to attract global tourists to cruise shipping in India and to popularise cruise shipping with Indian tourists. Participation of international cruise-ship operators in this sector will encourage the development of this sector and enable access to international best practices.

In order to provide clarity, certainty and a simple structure for the business of cruise shipping, which may be operating as multi-layer entities, the following is proposed –

A presumptive taxation regime is being put in place for a non-resident, engaged in the business of operation of cruise ships, alongwith exemption to income of a foreign company from lease rentals, if such foreign company and the non-resident cruise ship operator have the same holding company.

It is therefore proposed to insert a new section 44BBC, which deems 20% of the aggregate amount received/receivable by, or paid/payable to, the non-resident cruise-ship operator on account of the carriage of passengers as profits and gains of such cruise-ship operator. This section’s applicability will be subject to the conditions specified.

Provisions of section 44B relating to presumptive taxation for the shipping business of non-residents, shall therefore, no longer apply to the cruise-ship business.

Furthermore, lease rentals paid by a company that chooses the presumptive regime under section 44BBC (‘the first company’) are exempt in the hands of the recipient company if such company is a foreign company and both the recipient company and the first company are subsidiaries of the same holding company.

This is intended to be done by inserting a new clause (15B) into section 10. Subsidiary and holding companies are defined in the Explanation for this new clause. This exemption will be granted until assessment year 2030-31.

These amendments will take effect from the 1st day of April 2025 and will, accordingly, apply in relation to the assessment year 2025-26 and subsequent assessment years.