CBDT has clarified tax liability for remuneration received by a non-resident seafarer in NRE (non-resident external) account kept with an Indian bank.
|Salary of a non-resident seafarer for services outside India on a foreign ship will not be included in the total taxable income of the seafarer, even though such salary is credited in the NRE account of the seafarer with an Indian bank.|
This Circular is important in view of the law laid down by the Kolkata Bench of the Tribunal in Tapas Kumar Bandopadhyay vs where it was held that even if the salary of a non-resident seaman accrued outside India, it was taxable in India if the employer credited it to the his NRE account. But now the recently announced tax exemption has provide a great relief to the non-resident seafarers.
The Income tax exemption has been a long pending demand of the leading merchant navy unions – the Maritime Union of India (MUI) and the National Union of Seafarers of India (NUSI).
It will save thousands of seafarers from paying taxes on their overseas earned salary being sent to India to their NRE Accounts.
Who is Non Resident Seafarer?
In Case of Sailing on Foreign ships: Indian crew serving on foreign ships for 182 days or more are treated as non-resident in India, irrespective of where the ship trades (including Indian waters).
In case of sailing on Indian ships : A seafarer serving on Indian ships outside India for a period of 182 days or more in a year is considered to be a non-resident. However, the time spent by a ship in Indian territorial waters is considered as period of service in India, according to tax rules framed in 1990. The number of days outside India of Indian crew working on such Indian ships gets counted only from the date when the Indian ship crosses the coastal boundaries of India.
As per Central Board of Direct Taxes (CBDT) circular no. 13/2017 dated 11.04.2017.