Not all seafarer contracts enjoy tax exemption. The tax treatment of an Indian marine officer depends heavily on the operational classification of the vessel: whether it is a Coastal Vessel (Home Trade) or a Foreign Going Vessel (FG).
Foreign Going (FG) Vessels: Full Rule 126 Benefit
Under Section 3(12) of the Merchant Shipping Act, 1958, a foreign-going ship is one that trades between an Indian port and a foreign port, or entirely between foreign ports. For crew on these vessels, CBDT Rule 126 applies in its entirety, allowing sign-on and sign-off CDC stamps to count toward your 182-day NRI exemption.
Coastal Shipping (Home Trade): The Domestic Tax Trap
If your vessel operates solely between ports in India (e.g., Mumbai to Chennai, Kandla to Cochin), it is classified as coastal trade. In this scenario:
- Rule 126 does not grant exemption because the vessel remains inside Indian waters.
- Your salary is treated as income arising from services rendered within India.
- Such income is 100% taxable under Indian tax slab rates, even if paid in US Dollars or Euros.
If your year involves mixed coastal and foreign contracts, consult our maritime tax CAs to segregate contract days accurately.