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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Managerial Decisions

A company owns a qualifying ship that it uses as a fishing vessel for 35 days in a tax year, and otherwise operates it as a cargo carrier. Under the definition of qualifying ship in the Income-tax Act, 2025, what is the position?

The ship is not a qualifying ship. The definition excludes a qualifying ship used as a fishing vessel for more than thirty days during a tax year, and 35 days exceeds that limit, so the tonnage tax benefit would be unavailable on it.

  1. AIt remains a qualifying ship because fishing use is permitted for up to 90 days
  2. BIt remains a qualifying ship because only fishing vessels as a registered class are excluded
  3. CIt is not a qualifying ship because use as a fishing vessel for more than thirty days in a tax year takes it outside the definitionCorrect
  4. DIt is a qualifying ship only if the net tonnage is above 1,000

Explanation

The definition excludes a qualifying ship used as a fishing vessel for more than thirty days during a tax year. At 35 days the threshold is crossed. The 90-day and 1,000 tonnage figures are not in the text; the minimum tonnage is fifteen net tonnage.

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