FINANCE MINISTRY TO EXTEND NRI BENEFITS FOR FOREIGN GOING SEAFARERS IN INDIAN WATERS ALSO

FSUI Welcomes Move By Ministry; Real Income Of Seamen Could See a Rise Of As Much As 30% 

A long pending demand of seafarers working on Indian flag ships and the merchant navy trade unions are all set to get fulfilled with the finance ministry in-principle agreeing to extend non-resident Indians (NRIs) status and the subsequent income tax benefit to the seafarers while in Indian waters as well. At present over 50,000 seafarers working on Indian flag ships do not enjoy the benefit. It is restricted only to seamen employed in ships with foreign flag.

Currently seamen employed in Indian flag vessels become eligible for NRI benefits in Income Tax only if he spends more than 183 days in foreign water. So, if a seafarer serves for 200 days in a foreign going ship that spent twenty days in the Indian water collecting cargo from, for instance, Mumbai, Mangalore and Kochi ports, the seaman would not become eligible for NRI status. The number of days served by him in Indian water will be deducted from the total number of days served on the ship, and if the tally falls short of 183 days, then he will become liable to pay full taxes.

Once the new guideline comes into effect, even the days spent in domestic water will be taken into consideration along with the days spent in foreign water. “Our former Vice President, the late Dr. M. K. Pandhe had pointed out to Dr. Pranab Mukherji, the then Finance Minister, in the pre-budget meeting of 2009 and through various other letters and petitions, that the Indian officers and seamen who are working onboard the Indian flag ship is subjected to the Income Tax Process, as taxes, whereas the officers and seamen of the Foreign flag vessels are exempted by the Indian Government,” says Mr. Naresh Birwadkar, General Secretary, Forward Seamen’s Union of India (FSUI). “With the correction of disparity, seamen employed by Indian ships could end up saving as much as 30% of the their pay.”

“Once the new directive is issued, Indian officers and seafarers will find it equally attractive to be employed by Indian vessels. Indian officers and seafarers currently prefer to work for foreign flag vessels, making a dent in the Indian Shipping Industry creating shortage of officers. Many Indian flag ships are standing without proper manning and unable to sail out as key officers are not forthcoming. The new structure will hopefully correct the imbalance,” adds Mr. Birwadkar.

Forward Seamens’ Union of India (FSUI), the largest trade union of Indian seafarers has been demanding an NRI status and review on tax structure for them. “We have been advocating with the various central government agencies for the same. Now, the finance ministry has agreed. A formal notification will be issued soon,” said FSUI’s General Secretary Naresh Birwadkar.

The new initiative comes in the wake of the Government lifting restrictions on owning foreign flag ships and enabling Indian companies to register a ship in a foreign jurisdiction, yet operate those from here.