Budget Impact on Shipping Sector
Overall impact: Positive
Under existing provisions of Section 33AC of
the Income Tax Act, the entire profits of a shipping company are allowed as
a deduction if the profits are carried to a reserve account, subject to certain
conditions. However, the aggregate of the amounts that can be transferred
to such reserve is limited to twice the amount of the paid up share capital
of the company. In order to help the shipping industry modernise and expand
its fleet, the scope of the reserve has been expanded to include both share
premium reserve and general reserve. Moreover these reserves will not be considered
while computing book profits under Section 115JB and thus shipping companies
would be kept out of the purview of minimum alternate tax (MAT).
Special excise duty of 16% has been abolished
on yachts, vessels for pleasure or sports, rowing boats, canoes and other
floating structures. They will now attract only basic excise duty of 16%.
Special additional customs duty of 4% has been
imposed on dredgers, tugs and pusher crafts.
