Section 230 — Computation Methodology | ITA 2025

Section 230 — - TONNAGE TAX -- COMPUTATION OF TONNAGE INCOME

Section 230 is part of the Tonnage Tax framework (ss. 225-235), the alternative tax regime for qualifying Indian shipping companies. The substantive equivalent of 1961 s. 115VG. The provision is integral to operationalising the tonnage-tax-as-alternative-to-PGBP regime introduced by FA 2004 (1961 Chapter XII-G). Practitioner relevance: limited to operational shipping companies (SCI / Great Eastern Shipping / similar).

Statutory text — Income-tax Act, 2025

Marginal note -- Computation of Tonnage Income

(1) Irrespective of anything contained in any other provision of this Act, in computing the tonnage income of a tonnage tax company for any tax year (herein referred to as the “relevant tax year”) in which it is chargeable to tax as per this Part—

(a) sections 28 to 52 shall apply as if every loss, allowance or deduction referred to therein and relating to or allowable for any of the relevant tax years, had been given full effect to for that tax year itself;

(b) no loss referred to in section 108(1) or (2)(b) or 109(1) or 112(1) or 116(1), in so far as such loss relates to the business of operating qualifying ships of the company, shall be carried forward or set off where such loss re- lates to any of the tax years when the company is under the tonnage tax scheme;

(c) no deduction shall be allowed under Chapter VIII in relation to the profits and gains from the business of operating qualifying ships; and

(d) in computing the depreciation allowance under section 33, the written down value of any asset used for the purposes of the tonnage tax business shall be computed as if the company has claimed and has been actually allowed the deduction in respect of depreciation for the relevant tax years.

(2) Section 112 shall apply in respect of any losses that have accrued to a company before its option for tonnage tax scheme and which are attributable to its tonnage tax business, as if such losses had been set off against the relevant shipping income in any of the tax years when the company is under the tonnage tax scheme.

(3) The losses referred to in sub-section (2) shall not be available for set off against any income other than relevant shipping income in any tax year beginning on or after the company exercises its option under section 231.

(4) Any apportionment necessary to determine the losses referred to in sub-section

(2) shall be made on a reasonable basis. Method of opting of tonnage tax scheme and validity.

Tonnage tax framework operational provision. Section 230 addresses computation of tonnage income -- a key component of qualifying shipping company taxation under the alternative tonnage-based regime introduced by FA 2004. The regime allows shipping companies to compute taxable income on a notional tonnage basis (per net tonnage of qualifying ships per day) rather than actual profit, reducing tax volatility from highly cyclical shipping industry economics. Once option exercised under s. 231, binding for 10 years per s. 232. PRACTITIONER: limited audience -- few qualifying Indian shipping companies; documentation extensive given technical nature.

CROSS-REFERENCES

Section 225 -- Tonnage tax charge.
Section 226-235 -- Tonnage tax framework.
Sections 26-54 -- Regular PGBP (overridden).
Merchant Shipping Act 1958.

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 230	INCOME-TAX ACT, 1961 -- s. 115VG
Computation of Tonnage Income	1961 s. 115VG