Income Tax Guide for Indian Seafarer (Merchant Navy)
Meaning of seafarer
How seafarer earn
Income Tax on seafarer
Meaning of Seafarer
A sailor, seaman, mariner or a seafarer is a person who navigates water bone vessels or assists as a crew member in their operation and maintenance.
Seafarer holds a variety of ranks and professions, each of which carries unique responsibilities which are integral to the successful operation of an ocean-going vessel. A common deck crew for a ship includes Captain / Master, Chief Officer/ Chief mate, Second officer/ Second mate, Able seaman, Ordinary seaman, Deck cadets etc. A common engine crew will include Chief Engineer, 2nd Engineer, 3rd Engineer, 4th Engineer (optional), Engine Cadet, Fitter, Motorman, Oiler etc. Other than this saloon staff will comprise of Chief Cook and General Stewart but the number and rank of crew members serving on a ship will vary according to the size of the vessel, trade area of the vessel, Minimum Safe Manning certificate, administration etc.
How seafarer earns
Seafarer generally receives remuneration in the form of salaries from the companies.
Income Tax on seafarer
The taxability of salary received by a seafarer is based on the residential status of the seafarer.
The salary received by a resident seafarer will be taxable as per the laws of the Income tax department. No special exemption is available.
The salary of a non-resident seafarer will not be included in the total taxable income of the seafarer.
Meaning of Non-Resident Seafarer
An individual is said to be Non-Resident Seafarer if he is outside India for 184 days or more during the financial year (185 days or more in case of leap year).
Calculation of period outside India
Stamping dates in the passport is the basic criteria for calcaultion of period outside India. Generally, passport dates are used when you join and sign off from ship outside India.
However when you join or sign off from India then the CDC dates shall be used for calculation of period outside India.
Calculation will be done in the above manner for Indian Flag Ship or Foreign Flag Ship.
Sum of all the period (which satisfies above conditions) should be used when there are multiple voyages in a single financial year. For example, if there are 2 voyage for a period of 100 days and 90 days during FY 2016-17 then the period outside India will be 190 Days.
The period of the voyage should be calculated considering the financial year. For example, if a voyage started on 01 Dec 2016 and end on 01 May 2017 then the period outside Indian will be from 01 Dec 2016 to 31 March 2017 for the FY 2016-17 & from 01 April 2017 to 01 May 2017 for the FY 2017-18.
Both the stamping date (starting and ending) will be considered as date outside India. For example, if the starting stamp date 01 April 2017 and ending stamp date is 30 April 2017 then the period outside India shall be 30 days..
If a ship spent time in Indian territorial waters then it will be counted as period outside Indian if it is part of the eligible voyage.
As per Notification No. 70/2015/ F.No.142 /12/2015-TPL, period beginning on the date entered into the Continuous Discharge Certificate (CDC) in respect of joining the ship by the individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage.
“Eligible voyage” shall mean a voyage undertaken by a ship engaged in the carriage of passengers or freight in international traffic where-
(i) for the voyage having originated from any port in India, has as its destination any port outside India; and
(ii) for the voyage having originated from any port outside India, has as its destination any port in India.
Other related things:-
If a person status is non-resident for one of the sources then he will be treated as non-resident for all the sources of income.
Interest earned on NRE saving bank account is exempt from Tax for all the individual.
Note:- As per Circular No. 13/2017 issued by Central Board of Direct Taxes, salary accrued to a non-resident seafarer for services rendered outside India on a foreign ship shall not be included in the total income merely because the said salary has been credited in NRE account maintained with an Indian bank by the seafarer.
This circular specifically clarify if below conditions are met then the salary received will not be included in the total income of the individual
Service rendered outside India
Credited to NRE Bank account
However, it does not mean if you have received a salary from an Indian flagship then it is taxable as above circular is silent in this case. The above circular is just a clarification issue by CBDT for a specific condition.
IN MY OPINION, IF YOU ARE A NON RESIDENT SEAFARER THEN THE SALARY RECEIVED SHALL NOT BE INCLUDED IN YOUR TAXABLE INCOME.