Section 227 — Computation of tonnage income

(1) The tonnage income of a tonnage tax company for a tax year shall be the
aggregate of the tonnage income of each qualifying ship computed as per
sub-sections (2) and (3).
(2) For the purposes of sub-section (1), the tonnage income of each qualifying ship
shall be computed as per the following formula:—
TI = DTI × N
where,—
TI = the tonnage income of each qualifying ship;
DTI = the daily tonnage income of each qualifying ship;
N = the number of days in the tax year or in part of the tax year
in case the ship is operated by the company as a qualifying
ship for only part of the tax year.
(3) For the purposes of sub-section (2), the daily tonnage income of a qualifying
ship having tonnage referred to in column B of the Table below shall be the amount
specified in the corresponding entity in column C thereof:
TABLE
Sl.
No.
Qualifying ship having net tonnage Amount of daily tonnage income
A B C
1. Up to 1000. ` 70 for each 100 tons.
2. Exceeding 1000 but not more than
10000.
` 700 plus ` 53 for each 100 tons
exceeding 1000 tons.
3. Exceeding 10000 but not more than
25000.
` 5470 plus ` 42 for each 100 tons
exceeding 10000 tons.
4. Exceeding 25000. ` 11770 plus ` 29 for each 100 tons
exceeding 25000 tons.
(4) For the purposes of this Part of the Chapter, the tonnage shall—
( a) mean the tonnage of a ship or inland vessel, as the case may be, indicated
in the 37[valid certificate] referred to in sub-section (9); and
( b) include the deemed tonnage, being the tonnage in respect of an arrange-
ment of purchase of slots, slot charter and an arrangement of sharing of
break-bulk vessel, computed in the manner, as may be prescribed.
(5) The tonnage shall be rounded off to the nearest multiple of hundred tons and
for this purpose any tonnage consisting of kilograms shall be ignored and if the
tonnage so rounded off is not a multiple of hundred, then, if the last figure in that
amount is,—
( a) fifty tons or more, the tonnage shall be increased to the next higher
tonnage;
( b) less than fifty tons, the tonnage shall be reduced to the next lower ton -
nage,
which is a multiple of hundred and the tonnage so rounded off shall be the tonnage
of the ship for the purposes of this section.
(6) No deduction or set off shall be allowed in computing the tonnage income under
this Part of the Chapter, irrespective of anything contained in any other provision
of this Act.
(7) Where a qualifying ship is operated by two or more companies by way of—
( a) joint interest in the ship; or
( b) an agreement for the use of the ship,
and their respective shares are definite and ascertainable, the tonnage income of
each such company shall be an amount equal to a share of income proportionate
to its share of that interest.
(8) Subject to the provisions of sub-section (7), where two or more companies are
operators of a qualifying ship, the tonnage income of each company shall be com-
puted as if each had been the only operator.
37. Substituted for “certificate” by the Finance Act, 2026, w.e.f. 1-4-2026.
(9) For the purposes of this Part,—
( a) the tonnage of a ship or inland vessel, as the case may be, shall be deter-
mined as per the valid certificate indicating its tonnage;
( b) “valid certificate” means,—
( i) in case of ships registered in India,—
( A) having a length of less than twenty-four metres, a certificate
issued under the Merchant Shipping (Tonnage Measurement
of Ship) Rules, 1987 made under the Merchant Shipping Act,
1958 (44 of 1958);
( B) having a length of twenty-four metres or more, an interna -
tional tonnage certificate issued under the provisions of the
Convention on Tonnage Measurement of Ships, 1969, as
specified in the Merchant Shipping (Tonnage Measurement
of Ship) Rules, 1987 made under the said Act;
( ii) in case of ships registered outside India, a licence issued by the
Director-General of Shipping under section 406 or 407 of the
Merchant Shipping Act, 1958 (44 of 1958) specifying the net ton-
nage on the basis of Tonnage Certificate issued by the Flag State
Administration, where the ship is registered or any other evidence
acceptable to the Director-General of Shipping produced by the
ship owner while seeking permission for chartering in the ship;
( iii) in case of inland vessel registered in India, a 38[certificate of regis-
tration] issued under the Inland Vessels Act, 2021 (24 of 2021).