FAQS on Section 115VP Time Limit Extension for Tonnage Tax Orders

Section 115VP of the Income-tax Act allows qualifying shipping companies to opt for the tonnage tax scheme by applying to the jurisdictional Joint Commissioner of Income-tax. Currently, the Joint Commissioner must approve or reject the application within one month from the end of the month in which it was received. The Finance Bill 2025 proposes to extend this time limit to three months from the end of the quarter in which the application is received. This revised time frame will apply to applications submitted on or after April 1, 2025. However, applications pending before this date will continue to follow the existing one-month time limit.

FAQs – Budget 2025: Increasing time limit available to pass Tonnage Tax order under section 115VP

Q.1 What is section 115VP of the Act?

Ans. A qualifying shipping company may opt for tonnage tax scheme by making an application under this section to the jurisdictional Joint Commissioner of Income-tax.

Q.2 What is the current time limit to pass an order under this section?

Ans. The Joint Commissioner has to pass an order granting or refusing the approval of the option given by the taxpayer for the tonnage tax scheme, within one month from end of the month in which application was received.

Q.3 What is the amendment proposed in Finance Bill 2025 with regards to the time limit?

Ans. The new time limit to pass an order is three months from end of the quarter in which application has been received.

Q.4 For which applications the new time limit will be applicable?

Ans. The time limit will be applicable for all the application received on or after 01.04.2025.

Q.5 What will be the time limit for the pending applications?

Ans. The existing time limit will be applicable on the pending applications.