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

A shipping company wants to opt for the tonnage tax scheme. Which combination of conditions makes it a 'qualifying company' under the Income-tax Act, 2025?

A qualifying company must be an Indian company with its place of effective management in India, own at least one qualifying ship, and have operating ships as its main object. Missing any one of these four conditions means it cannot opt for tonnage tax.

  1. AIt is an Indian company, its place of effective management is in India, it owns at least one qualifying ship, and its main object is operating shipsCorrect
  2. BIt is any company with a place of effective management in India that charters in one qualifying ship, with ship operation as a subsidiary object
  3. CIt is a foreign company owning at least one qualifying ship, with its board meeting in India
  4. DIt is an Indian company whose main object is ship operation but which owns no qualifying ship and only hires ships

Explanation

All four conditions must be met together: Indian company, place of effective management in India, ownership of at least one qualifying ship, and main object of operating ships. The other options omit at least one condition, such as Indian company status, ownership of a qualifying ship, or the main-object test.

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