On January 21, 2025, the Central Board of Direct Taxes (CBDT) notified the Income Tax (First Amendment) Rules 2025, making amendments to the Income Tax Rules 1962. This amendment introduces a new set of provisions aimed at simplifying and streamlining the tax regime for non-residents engaged in the business of operating cruise ships in Indian waters.
1. Effective Date
The Income Tax (First Amendment) Rules 2025 will come into force on January 21st 2025
2. Introduction of Rule 6GB
A significant amendment is the insertion of a new rule—Rule 6GB, which specifically addresses the computation of profits and gains for non-residents operating cruise ships in India. This rule is designed to provide clarity for cruise operators, outlining the conditions under which they can claim benefits under Section 44BBC of the Income-tax Act, 1961.
3. Conditions for Non-Residents Operating Cruise Ships
For non-residents to qualify for the benefits under Section 44BBC, they must meet the following conditions:
- Ship Capacity & Purpose: The cruise ship must have a passenger capacity of over 200 passengers, or a length of at least 75 meters, and must be used primarily for leisure and recreational purposes. It should also be equipped with appropriate dining and cabin facilities for passengers.
- Voyage Requirements: The ship should operate on a scheduled voyage or shore excursion, touching at least two Indian sea ports or the same sea ports twice.
- Primary Use for Passengers: The ship should be used mainly for passenger transport, not for cargo.
- Compliance with Guidelines: Operators must adhere to any relevant procedures or guidelines set by the Ministry of Tourism or Ministry of Shipping.
4. Impact on Non-Resident Cruise Operators
This new rule aims to create a clear framework for non-resident cruise operators, ensuring that those who meet these conditions can benefit from a simplified tax regime under Section 44BBC. The amendment is expected to boost the cruise tourism sector in India by providing greater clarity on tax obligations and encouraging more international operators to engage in India’s growing cruise market.
5. What This Means for the Industry
With cruise tourism gaining popularity worldwide, India has become an increasingly attractive destination for international cruise operators. By introducing these specific tax provisions, the Indian government is aiming to make the country a more appealing port of call for global cruise operators, while ensuring compliance with national regulations.
As this rule comes into effect, it is expected to not only support the growth of the cruise tourism sector but also facilitate smoother operations for international players in the industry.
