A non-resident ordinary cargo ship operator receives ₹85 lakh freight, ₹5 lakh demurrage and ₹2 lakh handling charges for cargo shipped from Mumbai. It also receives ₹50 lakh in India for cargo…
Question and options
A non-resident ordinary cargo ship operator receives ₹85 lakh freight, ₹5 lakh demurrage and ₹2 lakh handling charges for cargo shipped from Mumbai. It also receives ₹50 lakh in India for cargo shipped from a foreign port. It incurs ₹35 lakh of operating expenses. Ignoring treaty relief, what is its presumptive shipping income under section 61?
₹8.03 lakh
₹6.90 lakh
₹10.65 lakh
₹14.20 lakh
Answer and explanation
Under the table in section 61(2) of the Income-tax Act, 2025, a non-resident ship operator's income is 7.5% of the amounts for carriage shipped at Indian ports (including demurrage and handling charges) plus the amounts received in India for carriage shipped at foreign ports. That base is ₹92 lakh plus ₹50 lakh, or ₹142 lakh, giving ₹10.65 lakh. The figure of ₹6.90 lakh wrongly leaves out the foreign-port receipts, and operating expenses are not deducted from the presumptive amount.
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