Residendtial status of person sailing on ships

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Anand Subramaniam

Head Finance & Accounts

36 Points Posted on 28 February 2012

Hi,

I need to get clarified of the residential status of a person sailing in foreign waters but employeed on an Indian ship of a indian shipping co.

My queries..

1) Whether to apply clause (c) of section 6(1) for such a person. Whether one can apply clause (a).

2) What if sailing period out side India is less than 183 days (365days - 182 days) but have travelled to abroad for holidays for more than 10 days and thus making total stay outside india more than 183 days. Whether in such cases which clause is to be applied (c) or (a). i,e can we decide resd status just by counting 182days outside india or should we decide on the basis of his sailing period out side india.

3) What if the person is employed in a indian shipping co. Should this income be treated as indian income as it is for employment with indian co and hence taxed even if the same is remitted in foreign currency.

Replies (3)

CA. CS. Khushboo Dodhia Vora

Practicing Charatered Accountant

125 Points Posted on 28 February 2012

If an individual who satisfies understated both the conditions of section 6 of the Income-tax Act, then he becomes a Non-Resident.

· He is not in India for 182 days or more during the relevant previous year. (SECTION 6(1)(a)

· He is not in India for 60 days or more during the previous year and he is not in India for 365 days or more during the 4 years prior to the previous year.(SECTION 6(1)(c)

In the case of an individual being an Indian Citizen and a member of the crew of an Indian ship, the requirement of stay in India of 60 days in condition 2 above is extended to 182 days.

Thus in your case, only Section 6(1) (a) would be applicable if the person is an Indian Citizen.

Further irrespective of whether he was sailing or not, his total no of days outside India needs to be considered. It is not necessary that in order to claim the above relaxation, he needs to be sailing all the time when he is out of India.

The income would be taxed in India since the source of Income is India. However for individuals who are Non Residents as per Section 6, certain relaxations are provided in DTAA. This could be determined on case to case basis.

Dipjyoti Majumdar

CA in service & CS. dipmaj@

3505 Points Posted on 29 February 2012

Well explained by Khushboo.

Anand Subramaniam

Head Finance & Accounts

36 Points Posted on 29 February 2012

Well explained Madam.

I referred to a case law

[2011] 15 taxmann.com 36 (Pune)

IN THE ITAT PUNE BENCH 'A'

Madhukar Vinayak Dhavale

Income-tax Officer (Intl. Taxation)-III, Pune

I the above case only sailing period is considered for calculating NRI days. Attached is the file for your reference. Even after this judgement there seems to be ambiguity.