The budget for 2008-09 presented by finance minister P Chidambaram in the Indian parliament today has caused great disappointment among domestic shipowners and shipbuilders.
While shipbuilders had been hoping for revival of a 30% subsidy on ships being built in the country, shipowners were expecting withdrawal of income tax on tonnage tax reserves. The Finance Minister instead chose to present a populist budget in view of general elections in January 2009 or even earlier. Highlights of the pre-election budget included waiver of bank loans to poor and marginal farmers, income tax relief to the middle class and reduction of duty on small cars. However, while the finance minister announced income tax cuts, there will be no change in corporate tax rates. SS Kulkarni, Secretary General of the Indian National Shipowners association (INSA) told that his organization had highlighted four issues before the budget. “We were hoping that at least two, namely, corporate income tax on other income (interest earning on tonnage tax reserves) and minimum alternate tax on profit on sale of ships will be abolished. “However, first glance reveals that nothing has been given to the shipping industry. This is very disheartening.” He said.
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