Section 316
Section 316: profits of non-residents from occasional shipping business
Section 316 provides a self-contained mechanism for taxing a non-resident-owned or chartered ship that carries passengers, livestock, mail or goods from an Indian port. It deems a fixed 7.5% of the carriage receipts as taxable income, requires the ship's master to file a return before departure, and blocks port clearance until tax is paid or secured - while still letting the owner opt for a full regular assessment later.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
When this special regime applies
Irrespective of the Act's other provisions, Section 316 applies for levying and recovering tax on any ship belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India.
7.5% deemed income
| Item | Detail |
|---|---|
| Deemed taxable income | 7.5% of the amount paid or payable on account of such carriage, whether paid or payable in or out of India |
| What counts toward that amount | Includes demurrage charge, handling charge, or any other amount of a similar nature |
Return by the master of the ship, before departure
Before the ship departs from any Indian port, its master must prepare and furnish to the Assessing Officer a return of the full amount paid or payable to the owner/charterer (or anyone on their behalf) for carriage shipped at that port since the ship's last arrival there.
This requirement is deemed complied with if the Assessing Officer is satisfied it was not possible for the master to file the return before departure and the master made satisfactory arrangements for another authorised person to file the return and pay the tax, and that person files the return within thirty days of the ship's departure.
Assessment and time limit
On receiving the return, the Assessing Officer assesses the deemed income and determines the tax payable at the rate(s) in force applicable to the total income of a company that has not made arrangements under section 393(1) (Table, Sl. No. 7); that sum is payable by the master of the ship.
No assessment order under this section can be made after nine months from the end of the tax year in which the return was furnished. The Assessing Officer may call for accounts or documents needed to determine the tax payable.
Port clearance withheld until tax is secured
Port clearance is not granted to the ship until the Commissioner of Customs, or other duly authorised officer, is satisfied the tax assessable under this section has been paid, or that satisfactory arrangements have been made for its payment.
Option to be assessed on regular total income instead
The owner or charterer can, before the end of the year following the tax year in which the ship departed from the Indian port, claim to be assessed on his total income of that tax year under the Act's other provisions instead, with tax determined on that basis.
If this claim is made, any payment already made under Section 316 during that tax year is treated as advance tax adjusted against the tax payable, and the difference between what was paid and what is finally found payable is paid by him or refunded to him.
Frequently asked questions
What percentage of shipping receipts is treated as taxable income under Section 316?
7.5% of the amount paid or payable on account of carriage of passengers, livestock, mail or goods shipped at an Indian port - whether the amount is paid or payable inside or outside India, and including demurrage or handling charges.
Who is responsible for filing the return and paying the tax?
The master of the ship must file the return before departure from the Indian port, and the tax determined under Section 316(5) is payable by the master. If the master cannot file it himself, an authorised person can do so within thirty days of departure, subject to the Assessing Officer's satisfaction under Section 316(4).
Can the ship leave port before the tax is paid?
No - Section 316(8) says port clearance will not be granted until the Commissioner of Customs (or authorised officer) is satisfied the tax has been paid, or satisfactory payment arrangements have been made.
Can the non-resident owner ask for a full regular assessment instead of the 7.5% deemed-income route?
Yes - Section 316(9) allows the owner or charterer to claim, within a set time limit, to be assessed on his actual total income for the tax year under the Act's general provisions, with amounts already paid under Section 316 treated as advance tax and any excess refunded.
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Get help with non-resident shipping business taxationLast updated 9 September 2026