Centre notifies Presumptive Taxation for Non-Resident Cruise Ship Operators to Boost Investment

The Central Board of Direct Taxes (CBDT) has notified amendments in Income Tax Rules 1962 to prescribe conditions for applicability of presumptive taxation regime for non-resident cruise ship operators, aimed at boosting investment and employment in the cruise industry.

The amendment in Income Tax Rules 1962 notified via issuing a notification.

The presumptive taxation regime introduced in the Finance Act 2024, provides tax relief to non-residents who operate passenger cruise ships if certain conditions are met.

These amendments were proposed in the Union Budget to boost the cruise-shipping business, with the goal of making India an attractive cruise tourism destination by drawing global tourists to the country and popularising cruise shipping among domestic tourists.

The Centre additionally launched a five-year Cruise Bharat Mission, which aims to increase cruise tourism in India by 1 million passengers and create 400,000 jobs by 2029. The mission involves establishing a dedicated fund, reducing cabotage regulations, and providing financial incentives.

In a Press Release the CBDT stated:

As a measure to promote investment and employment, Finance (No. 2) Act, 2024 inter alia provided a presumptive taxation regime for non-residents, engaged in the business of operation of cruise ships. Further, exemption has been provided for any income of a foreign company from lease rentals of cruise ships, received from a related company which operates such ship or ships in India. Applicability of this presumptive taxation regime is subject to the conditions, as prescribed.

The conditions which have been prescribed for non-resident, engaged in the business of operation of cruise ships provide that such non-resident shall:-

(a) Operate a passenger ship having a carrying capacity of more than 200 passengers or length of 75 meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers;

(b) Operate such ship on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice;

(c) Operate such ship primarily for carrying passengers and not for carrying cargo; and

(d) Operate such ship as per the procedure and guidelines if any, issued by the Ministry of Tourism or Ministry of Shipping.

The Notification Read as Follows:

In exercise of the powers conferred by section 295 read with the sub-section (1) of section 44BBC of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

These rules may be called the Income-tax (First Amendment) Rules, 2025. They shall come into force on the date of their publication in the Official Gazette.

In the Income-tax Rules, 1962, after rule 6GA, the following shall be inserted, namely:–

“CCCB.- Special provisions for computing profits and gains of business of operation of cruise ships in case of non-residents.

6GB. Conditions for non-resident, engaged in the business of operation of cruise ships for section 44BBC.– For the purposes of section 44BBC, an assessee, being a non-resident, engaged in the business of operation of cruise ships shall,-

(i) operate a passenger ship having a carrying capacity of more than two hundred passengers or length of seventy-five meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers;

(ii) operate such ship on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice;

(iii) operate such ship primarily for carrying passengers and not for carrying cargo; and

(iv) operate such ship as per the procedure and guidelines if any, issued by the Ministry of Tourism or Ministry of Shipping.”.

For Official Notification Download PDF Given Below: