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Streamlining the process of No Objection Certificate (NOC) Port Clearance Certificate (PCC) voyage return and voyage assessment in the case of Foreign Shipping Companies (FSCs)

Income Tax - 30/2016 - Dated:- 26-8-2016 - CIRCULAR NO 30/2016 [F.No. 500/05/2014-FTD-I] GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES FOREIGN TAX AND TAX RESEARCH DIVISION-II FT AND TR-V SECTION Dated 26th day of August, 2016 Subject: . Representations have been received in the Board regarding the procedural difficulties faced by foreign shipping companies in issuance of Port Clearance Certificate (PCC) required as per provisions of Section 172 of t .....

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n to Customs department at the port (b) no uniform practice is being followed by the Port Assessing officers in giving NOC to each voyage and also in making the assessment of voyage return. 2. Section 172 of the Act provides for a self contained code for assessment of shipping business of non residents. As per the scheme of taxation contained in the said section, income of a foreign shipping company carrying passengers, livestock, mall or goods and leaving from an Indian port shall be deemed to .....

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e return, shall assess the income on account of the voyage and determine the tax payable on the same. It is the duty of the Customs authorities to ensure that port clearance is not given to the ship unless (a) either the tax due on the income has been paid or (b) satisfactory arrangements have been made for the payment of such taxes. Section 172 of the Act also lays down that the owner or the charterer of the ship may claim before the expiry of the assessment year relevant to the financial year .....

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shipping company is not required to make any payment of taxes in respect of, either the voyage returns filed under section 172(3) of the annual return filed under section 139 read with section 172(7) of the Act. On representation to the Board to do away with procedure of obtaining NOC for each voyage in cases covered by DTAA, Circular No 732 dated 20.12.1995 had been issued. As per the said Circular, the AO is competent to issue annual NOC valid for a year after carefully verifying applicabilit .....

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and port clearance and voyage return assessment are being done in a routine manner; whereas at some other ports, the port Assessing officers are not honouring the annual NOC and are still insisting for documentation such as submission of tax residency certificate, proof of effective management etc before the NOC leading to the port clearance is issued. It has been represented that in these cases, the insistence on filing details is leading to duplication of work as these documents have already .....

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vides for issue of annual NOC by AO after carefully verifying the applicability of DTAA. Annual NOC is to be issued in cases where no tax is leviable on foreign shipping company due to the DTAA. The AO before whom the request for annual NOC is filed by the foreign shipping company should accordingly examine the applicability of DTAA to the foreign shipping company before issue of annual NOC. The annual NOC should clearly mention the names of the ships owned by the foreign shipping company, names .....

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ting to the voyage shall be dealt with as below in three different ways: (i) In cases wherein entire cargo belongs to a single foreign shipping company which belongs to a country with full DTAA relief, the annual NOC issued by the jurisdictional AO will also serve the purpose of voyage NOC. In such cases, the requirement of voyage wise NOC has already been done away through Circular No 732 of 1995. It is further clarified that there is no need for a voyage NOC from the Income Tax Officer having .....

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ered Accountant (CA) as per enclosed proforma would be required to be filed by the Master of the ship before concerned Customs authority. The CA certificate will be accompanied with annual NOC for all the foreign shipping companies to which the cargo in the ship belongs. (iii) In any other case, the Master of the ship would be required to obtain a voyage NOC from the Officer having jurisdiction over the port. The Customs Authorities shall issue the PCC only upon production of such NOC or an auth .....

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with the AO having jurisdiction over the port. Since the voyage return has be filed within one month of the departure of the ship, it does not anyway affect the timely departure of the ship from the port. 9. Voyage Assessment In cases where a foreign shipping company eligible for full treaty relief prefers to be assessed on a voyage-wise basis i.e., on a ship basis, the Port Assessing Officer before whom such a voyage return has been filed shall give due credit to the annual NOC issued by the AO .....

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