Call to exempt Indian cruise tourism from taxation

2017-07-13T18:15:13+00:00 July 13th, 2017|Finance|

The Indian shipping ministry has asked the GST Council to exempt cruise tourism under the new indirect tax regime, in line with major cruising nations.

At present, cruise tourism is not taxed and the shipping ministry wants to keep it out of the GST regime in order to boost the industry, India Today reported this week.

To make India a top destination for cruise tourism, a policy is likely to be announced this month as steps are underway to expand number of cruise vessels to 700 from about 70 at present.

“Major cruising nations like UK, US and Germany have zero rate domestic cruises. India should also have zero rating for cruise tourism as it is in nascent stage in the country and such steps will provide it a much needed boost,” Ministry of Shipping said in a proposal sent to the GST Council, the newspaper reported.

It also said that the transportation of passengers (with or without belongings) using inland waterways is not a taxable service under the Finance Act, 1994 and the same rule should be applied to cruise ships operating domestically or internationally.

“Cruise tourism can be India’s economic growth engine, as well as a game changer as there is a vast untapped potential,” Shipping, Road Transport and Highways Minister Nitin Gadkari said last month.

Several measures have already been taken to boost infrastructure including the building of cruise terminals at five major ports able to handle international cruise ships — Mumbai, Goa, New Mangalore, Chennai and Cochin.

Modern cruise terminals being developed at the major ports will include hospitality, retail, shopping and restaurants, while about 200 minor ports will develop jetties for cruise vessels.

Recently, the Mumbai Port Trust, which has a dedicated berth for cruise ships, hosted its largest passenger ship ‘Genting Dream’ with 1,900 passengers.

To promote the sector, the Indian Government has allowed cruise ships to stay for three days, up from the earlier 24 hours. Rules have also been simplified to attract more vessels. Easier standard operating procedures (SOP) for cruise operations, involving multiple agencies, have already been issued.

Among other measures, the Government has allowed foreign flag vessels carrying passengers to call at Indian ports, without securing a licence from the director general of shipping, until 5th February, 2024.

Also, major ports will offer a minimum of 30% rebate across the board on all vessel related charges for cruise ships and not levy any priority fee.

Incentives to for cruise liners to use the larger ports as home ports include a rebate of 25% in vessel charges, in addition to the existing 40% discount for coastal vessels, India Today said.