Clauses 52, 53, 54 and 55 of the Finance Bill, 2026 propose a series of consequential and alignment-driven amendments to Chapter XIII-G of the Income-tax Act, 2025, which governs the tonnage tax scheme for shipping companies.
Although the Finance Act, 2025 extended the benefit of the tonnage tax scheme to inland vessels registered under the Inland Vessels Act, 2021, several provisions in Chapter XIII-G continued to be framed with reference to sea-going ships and maritime authorities. The amendments introduced by Clauses 52 to 55 address these mismatches and make the scheme practically workable for inland vessel operators.
All such amendments take effect from 1 April 2026, i.e. tax year 2026-27 onwards.
Clause 52: Clarification of “Valid Certificate” for Tonnage Computation
Existing Position
Section 227(4) provides that the tonnage of a ship or inland vessel shall be the tonnage indicated in the certificate referred to in section 227(9). However:
- The provision used the generic term “certificate”, and
- Section 227(9)(b)(iii) referred to a certificate under the Inland Vessels Act, 2021, without recognising that no separate tonnage certificate is issued under that Act.
What Does Clause 52 Change?
Clause 52 makes two related amendments:
- In section 227(4)(a), the word “certificate” is replaced with “valid certificate”; and
- In section 227(9)(b)(iii), the word “certificate” is replaced with “certificate of registration” issued under the Inland Vessels Act, 2021.
Implications
- Confirms that the certificate of registration, which records net tonnage, is the relevant document for inland vessels
- Removes the impractical requirement of producing a non-existent tonnage certificate
- Provides clarity for computation of tonnage income under the scheme
Clause 53: Inclusion of Inland Vessels in Core Passenger Activities
Existing Position
Section 228(3)(b)(ii)(A) treats on-board or onshore activities of passenger ships as part of the core activities of a tonnage tax company.
The wording did not explicitly cover passenger operations carried out by inland vessels.
What Does Clause 53 Change?
Clause 53 amends the provision to explicitly include inland vessels within its scope.
Implications
- Passenger transport services operated through inland waterways are treated at par with sea-going passenger ships
- Income from such activities qualifies as relevant shipping income
- Prevents unintended exclusion of inland passenger operators from tonnage tax benefits
Clause 54: Alignment of Compliance Conditions for Inland Vessels
Clause 54 introduces multiple amendments to section 232, which prescribes conditions for eligibility under the tonnage tax scheme.
(a) Minimum Training Requirements – Section 232(12)
- Inserts reference to guidelines issued by the Inland Waterways Authority of India (IWAI)
- Such guidelines must be notified by the Central Government
- Applies specifically in the case of inland vessels
Implication: Recognises that training standards for inland navigation are governed by a different regulatory authority than maritime shipping.
(b) Certification of Training Compliance – Section 232(13)
- Requires submission of a certificate issued by the designated authority under the Inland Vessels Act, 2021, instead of the Director-General of Shipping, for inland vessels
Implication: Aligns documentation requirements with the correct statutory authority.
(c) Computation of Average Net Tonnage – Section 232(17)
- Adds reference to the Inland Waterways Authority of India for consultation while prescribing the method of computing average net tonnage for inland vessels
Implication: Ensures tonnage computation reflects inland vessel norms and practices.
Clause 55: Definition of Inland Waterways Authority of India
Clause 55 amends section 235 (definitions for Chapter XIII-G) to insert a definition of:
“Inland Waterways Authority of India”, having the meaning assigned under section 3 of the Inland Waterways Authority of India Act, 1985.
Implications
- Removes ambiguity in statutory references
- Ensures consistent interpretation across the tonnage tax provisions
Nature and Scope of the Amendments
What These Amendments Do
- Operationalise the extension of the tonnage tax scheme to inland vessels
- Align tax provisions with the Inland Vessels Act, 2021 and inland waterways regulators
- Provide clarity on certification, training, and tonnage computation
What They Do Not Do
- ❌ Do not introduce a new tonnage tax regime
- ❌ Do not alter the presumptive income formula or tax rates
- ❌ Do not expand eligibility beyond what was already extended in Finance Act, 2025
The amendments are facilitative and alignment-oriented, not policy-driven.
Effective Date
✔ Applicable from 1 April 2026. Applies to tax year 2026-27 and subsequent tax years.
Conclusion
Clauses 52 to 55 of the Finance Bill, 2026 complete the legislative framework required to effectively implement the tonnage tax scheme for inland vessels. By aligning certification requirements, training norms, income classification, and statutory definitions with the Inland Vessels Act, 2021 and the Inland Waterways Authority of India, the amendments ensure that inland shipping operators can seamlessly access and comply with the tonnage tax regime.
The changes reinforce the policy objective of promoting inland water transport, while preserving coherence and certainty within the income-tax law.
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