CS Professional · Advanced Direct Tax Laws and Practice · Tax Audit
Sagar Shipping Ltd, a qualifying company, applied for the tonnage tax scheme on 10 May 2027 (the first quarter of the tax year ends on 30 June 2027). The Joint Commissioner approved the option. By when must the order have been passed, and for how long does the option remain in force from exercise?
The order must be passed before three months from the end of the quarter in which the application was received, which is 30 September 2027 here, and the approved option remains in force for ten years from the date it was exercised, per section 231.
- ABy 30 September 2027; ten yearsCorrect
- BBy 31 July 2027; five years
- CBy 30 September 2027; five years
- DBy 31 August 2027; ten years
Explanation
Section 231(6) requires the order before three months from the end of the quarter in which the application was received. The quarter ends 30 June 2027, so the deadline is 30 September 2027. Under section 231(8) an approved option stays in force for ten years from exercise. The five-year options use a wrong period, and counting three months from the application date gives a wrong deadline.
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