What's your income tax and service tax status as an Indian seafarer?

Before you read further and before I proceed further, it is important to point out that this is by way of my understanding of a very complex subject drawn basis my research, and is in no way supposed to be an advisory or comment or guidance. PLEASE do consult your own tax advisor under all circumstances. I am not a professional tax person and this does not claim to be anything other than my views, issued without guarantee. This was the fine print.


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As a seafarer, when was the last time you looked closely at the TDS (Tax Deducted at Source) Certificate given to you by the shipowner, agent or shipmanagement company> Broadly, this could have been:-


# A Form 16 - which makes you, in aspects, an "employee" earning an "income" from the company or entity issuing you the Form 16. As per a variety of laws, rules and more, the said employer MUST also adhere to issues like leave wages, Employee Provident Fund Organisation (EPFO) adherences, Articles of Agreement while onboard ship if applicable, the MUI or IMB or similar agreement on perquisites, Income Tax Act and the various aspects thereof. No need, however, of worrying about Service Tax here - as of now, and to my best understanding, when working on Indian flag ships.


For those claining tax exemption on NRI status, and having no Form 16 or 16A, this may be helpful too, towards a better understanding of Section 5(2) and related.


http://taxworry.com/is-salary-received-in-nre-account-in-india-for-services-rendered-outside-india-by-a-non-resident-taxable-in-india/


# A Form 16A - which makes you, for this purpose, a recipient of either a "fees for professional or technical services" or "payments to contractors and sub- contractors". And here, you are most increasingly over the last few years, going to be liable for charging service tax to the company that made these payments to you.


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So, what's Service Tax in India all about, then?


Here are the FAQs on service tax:-


http://www.servicetax.gov.in/faq-29sept11.pdf


Q:- "Who is liable to pay service tax?
Ans:- Normally, the "person‟ who provides the taxable service on receipt of service charges is responsible for paying the Service Tax to the Government (Sec.68 (1) of the Act). However, in the following situations, the receiver of the Services is responsible for the payment of Service tax : (1) Where taxable services are provided by foreign service providers with no establishment in India , the recipient of such services in India is liable to pay Service Tax.


Q:- Are seafarers exempted?
Ans:- NO.


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Now, what is the shipping industry in India, doing about this?


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As far as the Indian National Ship Owners Association (INSA) is concerned, this judgement pertaining to Service Tax referring to them may be of interest, and please note, obviously service tax will apply to resident Indians also.


http://taxworry.com/is-salary-received-in-nre-account-in-india-for-services-rendered-outside-india-by-a-non-resident-taxable-in-india/


http://www.servicetax.gov.in/st-cirmainpg.htm


(quote) 


""Sub: Applicability of service tax on taxable services provided by a non-resident or a person located outside India to a recipient in India-reg.


Kind attention is invited to instruction F No. 275/7/2010-CX8A, dated 30.6.2010, wherein the Board had communicated its view that services tax on a taxable service received in India, when provided by a non-resident/person located outside India, would be applicable on reverse charge basis with effect from 1.1.2005, and that the ratio of judgement in M/s Indian National Shipowners Association (INSA) case [2009 (13) STR 235 (Bom)] would not apply to such cases. Further, direction was issued to field formations to defend the levy of service tax on such services for the period on or after 1.1.2005, as post INSA judgment, it has been held by the High Courts/Tribunal in a large number of cases, applying ratio thereof, that service tax on such services is leviable only w.e.f. 18.4.2006. However, the appeals filed by the department before the Hon’ble Supreme Court, for defending the levy of service tax on such services w.e.f. 1.1.2005, have been dismissed recently (subsequent to the issuance of said instruction dated 30.6.2010) in the following cases.






(i) SLP (C) No. 29539 of 2010 in CCE Vs Bhandari Hosiery Exports Ltd


(ii) SLP (C)No. 18160 of 2010 in CST Vs Unitech Ltd


(iii) SLP (C) No. 34208/09 of 2010 in UOI Vs S R Batliboi & Co.


(iv) SLP (C)No. 328/332 of 2011 in UOI Vs Ernst & Young


(v) SLP (C) No. 25687-25688/2011 in CCE Vs Needle Industries


(vi) SLP (C) No. 25689-25690/2011 in UOI Vs SKM Engg Products






Further, Review Petition No. 1686 of 2011 filed in the case of Bhandari Hosiery has also been dismissed by the Hon’ble Supreme Court vide order dated 18/8/2011.






2. In view of the aforementioned judgments of the Hon’ble Supreme Court, the service tax liability on any taxable service provided by a non resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.4.2006, i.e., the date of enactment of section 66A of the Finance Act, 1994. The Board has accepted this position. Accordingly, the instruction F No. 275/7/2010-CX8A, dated 30.6.2010 stands rescinded.






3. Appropriate action may please be taken accordingly in the pending disputes.


Yours faithfully,










(G. D. Lohani)


Director (Legal)


Copy for information to:


(i) Member (Budget)/Member (ST)


(ii) Joint Secretary (TRU-II)/Commissioner (ST)-CBEC"" 


(unquote)


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Please consult your rax advisor and PLEASE get opinions in writing. If your ship-owner company or ship-manager company or any of the multiple via medias in between say something else, then please take it in writing too.


AND please note:- dual "agreements" of the sort that are being used on Indian ships are just adding to your liabilities. Please be careful about those, also.


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Defaulting RPS agents in India, and some info on Killick and Ind-Aust

As most of my seafaring and shipping friends in India should know, shipping companies and agents are prohibited by law from preventing or detering seafarers from gaining employment, and most certainly entities like FOSMA, MASSA and INSA and agency or ship-owning companies under them cannot use, as per Rule 3(d) ""no means, mechanism or list is used with the intention to prevent or deter seafarers from gaining employment.""

Here is the url:-

http://www.dgshipping.com/dgship/final/rules/ms_recruit_placement_seafarers_2005_Cov.htm

Read the whole thing but also please see 3-d, and in this case, in a similar related case relating to Killick Marine, whose RPS licence was expiring on the 17th of October 2011, and it is likely that the complaint about Killick Marine had been placed before that date.

58 Mumbai M/S. KILLICK MARINE SERVICES LTD., MUMBAI 9, Commercial Union House, 2nd Floor, 9, Wallace Street, Fort, Mumbai - 400001. -- RPSL-MUM-039 18.10.2006 17.10.2011

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In addition, over the last few days, I have received copies of letters written by some companies to other companies "black-listing" seafarers. Along with this, I have received information about non-payment of dues, bad behaviour, demand of bribes by recruiting officers as well as others, and similar.

This blog proposes to start its own "Now Investigating List" of defaulting agencies and owners, and the opening names for "NIL companies" are:-

1) Killick Marine / Mumbai / RPS MUM 039
2) Ind-Aust / Mumbai /

More details will follow, as well as specific complaints.

All seafarers with complaints against agencies and shipowners in India are encouraged to get in touch with the undersigned in confidence.

Jai Hind, for better shipping from India!!

(ps: Just received a phone call from some chump saying that "Farshid Savaksha who is GM of Killick Marine in Mumbai has told me to tell you to remove Killick Marine's name from the list. Or . . .")

Or what else, chump? I actually want Farshid Savaksha's parents, family, friends, children and neighbours, and everybody else who knows him, to read this - Farshid Savaksha was and is responsible for ruining the career of a decent human being, and will now soon pay, in this world and the next, for his sins.

kêm-nâ mazdâ mavaitê pâyûm dadât
hyat mâ dregvå dîdareshatâ aênanghê
anyêm thwahmât âthrascâ mananghascâ
ýayå shyaothanâish ashem thraoshtâ ahurâ
tãm môi dãstvãm daênayâi frâvaocâ.

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To quote:-
The Respondents knew well that the DG Shipping is in very truth the statutory guardian of the Indian Shipping Industry, and guards jealously the standing of Indian seamen. To such an Officer an appeal invoking the larger interests of Indian shipping and Seamen could be nothing short of a provocation, a provocation to intervene and ensure Divekar's blacklisting. . . read on:-

http://matescabin.blogspot.com/2011/10/uasc-of-uae-and-kuwait-and-killick.html

It took Capt. Divekar 10-11 years to get justice, but at the end, despite lack of any support from the Unions or DG Shipping, he did get it. For years, we have been hearing about shipping agencies maintaining "blacklists" of Indian seafarers, especially in cases where seafarers who had not been paid, or had been sent to work on unseaworthy ships, or similar, chose to demand their rights. Now copies of these so-called "blacklists" are out in the open, and in most cases, reflect nothing more than the personal opinions based on petty desperation and revenge that some of these so-called "agencies" put out - in some cases almost like blackmail weapons against Indian seafarers. In this case, Killick Marine, one of the so-called oldest and most reputed agencies, is one of the respondents.

Some of us have made a recomendation to the DG Shipping in Mumbai and the Ministry of Shipping in Delhi, as well as to certain private trusts associated with Killick Marine's personnel in this case, to suspend Killick Marine's RPS licence till this investigation on how they ruined the life of Capt. Deepak Divekar is completed.

We urge you to read this 100 page submission. A copy of the award shall be placed online soon, but interim, the big question here is this:- who is spoiling the name of Indian seafarers, the corrupt amongst the agency companies where the truth on maritime recruitment is well known globally . . . or the poor suffering Indian seafarer who has to face battle at every step from training and recruitment onwards?

YOU be the judge.

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Complaints received against ship-management agencies in India (RPS under DGS 2005)

Over the last few weeks, and more over the last few days after publishing Deepak Divekar's article (said issue having now been escalated to offices of DGS and NA/Jahaz Bhavan, Mumbai) I have received more than a few emails and telephone calls from impacted seafarers. Some of these have simple solutions, which could be implemented by the DGS or Shipping Master with no effor, if they really cared about the goodwill of seafarers and their familes - as well as some amount of protection for themselves, especially in context with seafarers sailing through non-RPS or on non-Indian flag vessels.

http://matescabin.blogspot.com/2011/10/request-to-all-those-with-complaints.html

http://matescabin.blogspot.com/2011/10/blacklist-of-defaulting-owners-and.html

Typically, these are the issues faced:-

# Seizing or holding back of documents like passport, CDC, STCW certificates and other originals by "agents", without issuing receipts, and then demanding money for the return. All the more problematic when the agent is unable provide a position on a ship, and the seafarer is losing opportunity while waiting, at his own cost. This often forces seafarers to accept lower paid positions which are also not useful from a career point of view.

I spoke to some of the better agencies and owners, and they simply do not do this - choosing to keep soft-copies instead, EXCEPT when originals are needed for visas, in which case the documented procedure is different. However, this practice is rampant with the majority of "ghatiyaa" agents, and that is what spoils the name of the community.

Suggestion:- Seizure or holding of documents is a criminal offence, but not much you as a seafarer can do unless you have a receipt. DGS and Shipping Master should immediately issue an order or circular that RPS agents and shipping companies must issue a receipt before taking any original documents, otherwise photocopies or soft copies should suffice.

# Ship that the seafarer landed up on is not the one he was selected for or told about. This may be regardless of articles or agreements signed. And once in a foreign port, in the middle of nowhere, nothing much the seafarer can do except suffer it out. This can happen in or off Indian ports too.

Again, the better agencies and owners provide vessel and company specific briefing, sometimes lasting as long as 2-4 working days, before sending a person out. Others, the ghatiyaa lot, often don't know much about things themselves. A seafarer has every right to know about the ship he is going on before he leaves home port.

Suggesion:- Seafarer must be provided with full particulars of the vessel he is being sent on, including basic minimum data on class, P&I, condition, age, and principal particulars - including all known details of owners and bankers. Once this is done, it is up to the seafarer. By rights, this data should be available online also, as soon as an owner or agent has the LOI or brief to provide Indian seafarers on the ship, then all details MUST be available on the agents website as well as on DG Shipping's website. No details, no Indian seafarer, atleast not through DGS or RPS Agent.

# Salaries are not paid in time, accounts are not received, exchange rate clarity is not provided and worst of all - deductions as well as taxation are not suitably explained.

This is the most amazing part of things in this day and age, when communications are instantaneous, and salaries should be in seafarer nominated accounts by or on the last date of the month.

Suggestion:- DGS / Shipping Master should take an 'action taken' report on a regular monthly reporting basis, submitted to the DGS not later than 7th of the next month, that ALL pending dues have been actually cleared in all cases - and exceptions, if any, with reasons, are to be listed vessel and person-wise.

# There was one salary indicated in the India office. There was another salary indicated in the contract signed. There was yet another salary in the articles. And then there was yet another different salary paid onboard. In addition, the joining date was w.e.f. the date the person joined the ship, rather than from the day he was confirmed for departure or actually departed.

The better companies who want to attract and retain better people tend to address this issue in a more reasonable way. But here again, it is the "ghatiyaa" agencies which spoil the industry's name.

Suggestion:- It should be made clear to the seafarer HOW MANY different agreements he shall have to be party to at the beginning itself, and he needs to be able to decide for himself if he wants to join or not. In advance.

# Vessel is sailing to or through piracy areas, and owner / operator is not relieving the seafarer.

Suggestion:- Your life and family's peace of mind is worth more than all the money you can earn. Pick up the phone, VHF, whatever, and call the Port Control, if your company is not getting you off the ship, and there is no help forthcoming from DGS / MMD / Shipping Master.

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More follows. There is suddenly a spate of articles required on FOC vessels after the grounding of the MSC chartered RENA off New Zealand (Astrolabe reef).

Monte Cristo yet another hijack in the Gulf of Aden area

http://www.somaliareport.com/index.php/post/1737/MV_Montecristo_Hijacked_by_Somali_Pirates

Another hijack, with Indians and others onboard, of a brand new bulk carrier this time.

More details follow soon.

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Update 13oct'11:- All seafarers onboard were rescued by the NATO led forces, Royal British Navy and US Navy, and all pirates held.

http://www.nato.int/cps/en/SID-D9C32FCD-5C79A24A/natolive/news_79242.htm

What's the real nutrition on the food you get on ships lately??

http://www.moneylife.in/article/development-and-free-marketsmdashdoes-it-mean-mncs-will-sell-us-back-our-water/20197.html

Healthy low-cost food and natural water to consume are important for all of us. Is there a conspiracy to force us Indians, in the name of "development" and "growth", to consume more and more unhealthy food and beverages?


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Especially important from the point of view of food served on board - increasingly not healthy, nutrition unknown.  Please read this and escalated to your company, manager and others respondible.