The Central Board of Direct Taxes (CBDT) has notified amendments in the Income-Tax Rules. These amendments prescribe conditions for the applicability of a presumptive taxation regime for non-resident cruise ship operators. This development, announced on January 22, 2025, is part of the government’s broader strategy to promote investment and employment in the country.
The Finance Act of 2024 introduced a presumptive taxation regime for non-residents engaged in the operation of cruise ships. This regime is subject to certain conditions. For instance, the passenger ship being operated must have a carrying capacity of more than 200 passengers or a length of 75 metres or more. The ship must be equipped for leisure and recreational purposes, with appropriate dining and cabin facilities for passengers.
Furthermore, the ship must be on a scheduled voyage or shore excursion, touching at least two sea ports of India or the same sea ports of India twice. It is also mandatory that the ship is primarily for carrying passengers and not for carrying cargo.
In addition to these conditions, the ship must be operated as per the procedure and guidelines issued by the Ministry of Tourism or Ministry of Shipping. These amendments were proposed in the Union Budget with the aim of attracting global tourists to cruise shipping in the country and to popularise cruise shipping with domestic tourists.
In line with this initiative, the Centre has launched a five-year Cruise Bharat Mission. This mission aims to boost cruise tourism in India with a target of 1 million passengers and the creation of 400,000 jobs by 2029. The mission includes setting up a dedicated fund, easing of cabotage regulations, and providing financial incentives. Union Minister for Ports Shipping and Waterways, Sarbananda Sonowal, stated at the time of the launch that cruise shipping has tremendous potential in the country, but has remained unexplored for long.
The Cruise Bharat Mission is a three-phase mission with the goal to develop world-class infrastructure and enable the growth of cruise tourism and maritime trade. The mission also focuses on building sustainable infrastructure and capital, such as world-class cruise terminals and marinas, while reducing carbon emissions. It also aims to make cruise operations more efficient using advanced technology and digital processes like e-clearance systems.
The Indian government’s focus on boosting the cruise industry is part of a broader strategy to attract foreign investments. The 2024 budget, presented by Finance Minister Nirmala Sitharaman, introduced several changes affecting foreign investments and Non-Resident Indians (NRIs). The government reduced corporate tax for foreign companies by 5 per cent, bringing the rate to 35 per cent. This move aims to attract more foreign investments. The government also increased Foreign Direct Investment (FDI) limits in various sectors to promote business ease, raising caps from 26 per cent to 49 per cent, and in some cases, to 74 per cent.
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