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Taxation of seafarer's income

Nishita Goyal (Assistant Manager - Finance & Accounts (APOLLO HOSPITALS INDORE)) (65 Points)

11 September 2016

Hi, recently there are discussions that seafarers income credited to their NRE accounts in India is liable to tax even though their residential status during AY is NRI (outside India for more than 182 days). This discussion has started as a result of a recent judgement passed by ITAT Kolkata Bench (attaching a copy of the same).

I intend to know is this a final judgement or further appeallable.

Also what will be the implications now for filing tax returns of a seafarer. My fiancee is a seafarer and his income also gets credited to NRE Account. Please provide your views and counter/supporting case laws for the same.

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1 Replies

Abhinav (CA) (397 Points)
Replied 26 January 2017

Most respectfully, ITAT decision in Tapas Kr. Bandopadhyay is an incorrect decision. The settled position of law till now and which has been upheld in various decisions like Avtar Wadhwan case is that if service is rendered outside India, then even if salary is received in India, no tax incidence arises under the Indian income tax law.

I have captured this controversy in a detailed post along with decisions you can have a look: https://www.abhinavgulechha.com/nri-seafarer-taxation/

Very recently by Dec end 2016 there are another favourable HC judgement in case of Utanka Roy

It is unfortunate that Kolkata bench of ITAT in Tapas Kr. case has not followed decision of higher court and it has caused so much controversy and heartburm for seafarers.

I request all seafarers to go into litigation by filing an appeal to the CIT Appeals and if not resolved, to ITAT, in case they receive an unfavourable assessment order taxing such income.