| 4.1.2 Minimum Alternate Tax (MAT) on Profit on Sale of Vessels
In India profit on sale of vessels is not covered under the tonnage tax regime. The company availing of the tonnage tax regime is liable to pay MAT @ 11.22 % on the book profits in case the tax payable on income (other than tonnage income) is less than 10% of the book profits. The profit on sale of vessels gets credited to the profit and loss account and is included in the book profits of the qualifying shipping company on which MAT is applicable. The Group was shown extracts from the relevant laws prevailing in the United Kingdom, Singapore, Ireland, Netherlands, Germany, Spain and Belgium, all of which showed that the profit on sale of vessels is covered within the scope of tonnage tax regime. In light of the practice in these important shipping nations it would be necessary to provide in our tax laws also that the surplus resulting from sale of vessels is covered within the scope of tonnage tax regime.
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