Impact on the Residential Status of Seafarer after reduction in number of days in Budget 2020 from 182 days to 120 days for deciding the residential status in India

As per existing provision,

An individual is said to be resident in India, if he—

(a) is in India in that year for a period amounting in all to 182 days or more; or

(b) is in India for a period of 365 days or more in four preceding years and his period of stay in India should have been 60 days or more in the current year.

Also

In the case of an individual,

(i) being a citizen of India, who leaves India in any year as a member of the crew of an Indian ship, or for the purposes of employment outside India, the provisions of sub-clause (b) shall apply in relation to that year as if for the words “60 days”, occurring therein, the words “182 days” had been substituted ;

(ii) being a citizen of India, who, being outside India ie NRI, comes on a visit to India in any year, the provisions of sub-clause (b) shall apply in relation to that year as if for the words “60 days”, occurring therein, the words “182 days” had been substituted.

Seafarer reduction day in Budget 2020

Interpretation

As per the existing provision, it meant that any seafarer who is an Indian citizen leaves India in any year as a crew member of ship shall be considered as Non Resident if his stay in India is less than 182 days in the current year or in the last four years, the stay is less than 365 days in total.

As per Notification No. 70/2015 F.No. 142 /12/2015-TPL, for counting the number of days outside India, if the ship is moving from Indian Port to any Port outside India or vice versa, then the number days outside India shall be counted from the sign on date entered in Continuous Discharge Certificate (CDC) of the seafarer till the date of sign off entered in the CDC.

Also, when a seafarer is coming to India for spending time with family time after sailing, then also he has to stay in India for less than 182 days in order to qualify as Non-Resident.

Example 1– A Seafarer joins the ship and the ship is only sailing in Indian Waters for a period of 190 days in FY 19-20. Also, the seafarer has stayed in India in past 4 years for 400 days. In this case the seafarer shall be resident of India since in order for a seafarer to become a resident of India, both the conditions should be satisfied ie 182 days or more in the current year and 365 days or more in the last 4 years.

Example 2– A Seafarer joins the ship and the ship is only sailing in Indian Waters for a period of 190 days in FY 19-20. But the seafarer has stayed in India in past 4 years for 300 days. In this case the seafarer shall be Non-resident of India since in last 4 years he has been in India for less than 365 days although his stay in India is 182 days or more in the current year.

Example 3– A Seafarer joins the ship and the ship is only sailing in Indian Waters for a period of 160 days in FY 19-20. But the seafarer has stayed in India in past 4 years for 400 days. In this case the seafarer shall be Non-resident of India since in the current year he has been in India for less the 182 days although his stay in India in last 4 years is 365 days or more.

Example 4– A Seafarer does his sign-on on 1st May 2019 and signs off on 1st January 2020. Both the dates are mentioned in the CDC of the Seafarer. Hence the period from sign on to sign off shall be 246 days. However, from 1st May 2019 to 1st July 2019, the ship was in Indian Waters only. Hence the total number of the days which the ship was in Indian Water was 92 days. However as per Income Tax Act, the period for which the ship was in Indian waters shall also be considered for deciding the number of days a seafarer is outside India, if the ship was sailing from a port in India to a port outside India or Vice versa. Hence the period from sign on and sign off mentioned in CDC shall be taken into consideration. Therefore, the seafarer is a non- resident since his stay in India is just 119 days (365-246) which is less than 182 days.

As per the Budget 2020,

An individual is said to be resident in India, if he—

(a) is in India in that year for a period amounting in all to 182 days or more; or

(b) is in India for a period of 365 days or more in four preceding years and his period of stay in India should have been 60 days or more in the current year.

Also

In the case of an individual,

(i) being a citizen of India, who leaves India in any year as a member of the crew of an Indian ship, or for the purposes of employment outside India, the provisions of sub-clause (b) shall apply in relation to that year as if for the words “60 days”, occurring therein, the words “182 days” had been substituted ;

(ii)being a citizen of India, who, being outside India ie NRI, comes on a visit to India in any year, the provisions of sub-clause (b) shall apply in relation to that year as if for the words “60 days”, occurring therein, the words “120 days” had been substituted.

Everything as per the existing provision is same except the fact that when a Non-Resident is visiting India, he has to stay in India for less than 120 days in order to qualify as a Non- Resident.

Hence the question is whether the change in the number of days would impact the seafarer or not?

As per my view, there is a specific clause for seafarer that he shall be a Non Resident, if his stay in India is less than 182 days in the current year or in the last four years, the stay is less than 365 days in total in India, then the number of days which is reduced to 120 days shall not be applicable to seafarer.

It will be applicable to other persons who are not seafarers because seafarer don’t stay at a particular place. They keep on sailing on ships. They do not have a fixed place to stay unlike other persons.

Hence as per my view, the amendment made by the budget won’t apply to seafarers.

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Member Since: 02 Mar 2020 | Total Posts: 2
Sachet V. Agarwal is associate member of Institute of Chartered Accountants of India (ICAI). He has experience in areas such as audit of Companies (Private and Public), Limited Liability Partnership (LLP), Unregistered Partnership firm, trusts, educational institutions, information systems, banks an View Full Profile

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8 Comments

  1. Alex says:

    I don’t understand when you say:

    As per my view, there is a specific clause for seafarer that he shall be a Non Resident, if his stay in India is less than 182 days in the current year or in the last four years, the stay is less than 365 days in total in India, then the number of days which is reduced to 120 days shall not be applicable to seafarer.

    there is no such rule I beleive

  2. Raj iyer says:

    Explained with clarity.can you explain about nri taxation too if it is applicable for seafarers as they do not pay tax to any country.

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