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

Under the Income-tax Act, 2025 provisions on tonnage tax, which one of the following vessels can be a 'qualifying ship' for a company planning to opt for the tonnage tax scheme?

A registered seagoing ship of at least fifteen net tonnage with a valid net tonnage certificate is a qualifying ship. Pleasure crafts, harbour and river ferries and factory ships are specifically excluded, even if registered and large, so they cannot support a tonnage tax option.

  1. AA seagoing ship of 15 net tonnage or more, registered under the Merchant Shipping Act, 1958, with a valid net tonnage certificate in forceCorrect
  2. BA pleasure craft used for sport or recreation, registered in India with a valid net tonnage certificate
  3. CA harbour ferry of 500 net tonnage registered in India with a valid net tonnage certificate
  4. DA factory ship that provides processing services for fishing produce, registered in India

Explanation

A qualifying ship must be a seagoing ship or vessel (or inland vessel) of fifteen net tonnage or more, duly registered or licensed, and with a valid net tonnage certificate in force. Pleasure crafts, harbour and river ferries, and factory ships are expressly excluded, so the other options fail despite meeting size or registration conditions.

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