NRI status tweak leaves seafarers stranded on high seas
More than 3 lakh Indian seafarers including those working on foreign ships are set to face a double whammy, with Finance Minister Nirmala Sitharaman announcing changes to the rules for computing non-resident status for taxation purposes in the Budget.
Currently, to qualify for non-resident Indian (NRI) status, like any other citizen of India, a seafarer has to be outside India for 182 days, or six months in a year. Consequently, his entire foreign income is not subjected to tax.
Sitharaman’s announcement means that a seafarer will have to spend more time outside India – eight months or 240 days, instead of the existing 182 days – to qualify for NRI status and enjoy a tax-free salary.
“It is difficult for seafarers to get eight months at a stretch to trigger the NRI qualification rule,” explained Abdulgani Serang, general secretary-cum-treasurer of the National Union of Seafarers of India (NUSI), which represents general purpose staff working on board ships.
“It is also a double whammy for Indian seafarers,” Serang said. “ Because, even if you are outside India for 240 days as per the new rules and qualify for NRI status, if you don’t pay tax in the country or jurisdiction where you are an NRI, your entire income earned outside will be taxed in India.
“Unlike land-based jobs, seafarers are a floating population, they don’t have any country of residence. Today, they are in Greece, tomorrow they are in Finland. Logically they cannot pay tax and they are not supposed to pay because they are floating population.”
“But, under the new rules, it can be construed that they don’t pay tax in any other country, and hence will have to pay tax in India. This is a very serious issue,” he said.
“It’s a retrograde and negative step,” he stated, adding that the NUSI will raise the issue with the government.
Less attractive profession
The Budget announcement will make seafaring a less attractive profession for Indians at a time when the country is looking to raise the supply of crew to the global shipping industry.
“India has been providing quality and consistent manpower to Indian and global shipping industry for many years. About 70 per cent of Indian seafarers are working on foreign flag ships. With the new rules, the charm of seafaring will be reduced considerably, and foreign employers will find Indians seafarers more expensive and will start looking for alternatives,” Serang noted.
The new rule will restrict the supply of Indian seafarers to the global shipping industry and global fleet owners will rethink plans to hire Indian crew because they will become more expensive, he said.
“It is also an injustice to seafarers because when an NRI typically takes a land-based job in another country, he is in a comfortable environment. Here, seafarers, including thousands working on cruise ships, are risking their lives 24×7 on the high seas, facing inclement weather and vagaries of nature to keep the lifeline of global trade alive and this is how you treat them,” he added.
Source: The Hindu Business Line