Mumbai: Shipping and oil companies have suffered a big tax set back. The Chennai bench of the Income Tax Appellate Tribunal or the ITAT has ruled that payment made by shipping companies to foreign entities for renting or charting ships is a royalty payment. CNBC-TV18 has more.
Shipping companies will now have to deduct tax at source for chartering ships.
This means that every company that charters in ships from abroad will now have to deduct 10 per cent tax at source before making the payment.
The ITAT ruling could impact shipping and oil companies to the tune of several hundred crore of rupees.
The ruling has been made with retrospective effect and could have a huge financial impact on companies, worth several hundred crore rupees.
Both the shipping industry and tax experts are protesting this ruling.
The end user, the ultimate consumer would get hit extremely hard because every user of shipping services or oil companies or petroleum import companies or for that matter coal import companies or commodities would go up by that amount
There are a variety of types of chartering but if you think of a thing like time charter, which involves crew and vessel, I do not think by any stretch of imagination that that can be considered use of equipment, it should not be considered as royalty.
Comments
0 comment