New Presumptive Scheme Section 44BBC: Boosting Cruise Tourism in India
The Union Budget 2024 has introduced a new presumptive taxation regime under Section 44BBC to promote the cruise tourism industry in India. Recognizing the significant potential of cruise tourism to generate employment and attract global tourists, the government aims to create a more favorable tax environment for foreign shipping companies operating domestic cruises. This initiative is part of a broader effort to make India a popular cruise tourism destination.
Key Provisions of Section 44BBC
Objective
The primary objective of Section 44BBC is to provide a clear, certain, and simplified tax structure for non-resident entities engaged in the cruise shipping business. This measure is expected to encourage international cruise operators to participate in the Indian market, bringing with them global best practices and boosting the domestic cruise industry.
Presumptive Taxation Regime
The new section proposes a presumptive taxation regime for non-residents operating cruise ships in India. Key features of this regime include:
- Deemed Profits: Twenty percent of the aggregate amount received or receivable by, or paid or payable to, the non-resident cruise ship operator on account of the carriage of passengers will be deemed as the profits and gains from this business.
- Conditions: The applicability of this section will be subject to prescribed conditions to ensure that the tax regime is applied appropriately and benefits the intended entities.
Exclusion from Section 44B
Previously, Section 44B of the Income-tax Act dealt with the presumptive taxation for the shipping business of non-residents. However, with the introduction of Section 44BBC, cruise ship operations will be excluded from Section 44B. The amended Section 44B will now apply only to non-residents engaged in the business of operating ships other than cruise ships.
Lease Rentals Exemption
To further support the cruise shipping industry, the Budget proposes an exemption for lease rentals paid by a company opting for the presumptive regime under Section 44BBC. This exemption applies if the lease rentals are paid to a foreign company, and both the recipient company and the first company are subsidiaries of the same holding company. This measure will be in effect until the assessment year 2030-31, as defined under the new clause (15B) in Section 10.
Implementation and Applicability
The amendments and new provisions under Section 44BBC will take effect from April 1, 2025, and will be applicable for the assessment year 2025-26 and subsequent years.
Impact on Cruise Tourism Industry
Encouraging Global Participation
The simplified tax regime is expected to attract more international cruise operators to India, enhancing the country’s appeal as a cruise tourism destination. The presence of global players will bring in international best practices, improve service quality, and boost the overall competitiveness of the Indian cruise tourism sector.
Boosting Domestic Tourism
With the introduction of Section 44BBC, the government aims to popularize cruise shipping among Indian tourists as well. Increased participation from international operators will lead to better infrastructure, more diverse cruise offerings, and potentially lower costs, making cruise tourism more accessible to the Indian population.
Employment Generation
The growth of the cruise tourism industry will create numerous direct and indirect employment opportunities. From jobs on the cruise ships themselves to those in related industries such as travel agencies, ports, and hospitality, the economic impact of a thriving cruise sector could be significant.
Visit www.cagurujiclasses.com for practical courses
