INCOME TAX GUIDE
FOR SEAFARERS 2025
RESIDENTIAL STATUS:
The Income Tax Act, 1961, taxes individuals based on their residential status. Section 6 of the Act defines this status and helps determine the extent of income subject to tax.
🔹 Resident Seafarers:
If a seafarer is classified as a resident, their entire global income is taxable in India. This includes their foreign salary.
Residents must file an ITR if their total income exceeds basic exemption limit, even if part of the income is earned outside India.
🔹 Non-Resident Seafarers (NRI):
A non-resident seafarer is taxed only on income that is accrued or received in India. If their salary is earned for services outside India and credited directly into an NRE account, it is not taxable in India.
However, Seafarers are advised to file an ITR to maintain proper tax records and for availing benefits like visa applications, loan approvals, and financial verifications.
CALCULATION OF PERIOD OUTSIDE INDIA:
Section 6 of the Income Tax Act lays down the criteria for determining residential status.
If the Seafarer stays outside India for 184 days or more during a financial year, then the Seafarer is considered as Non-Resident.
🔹 Rules for Calculation:
If the sign on and sign off both are from India, then CDC (Continuous Discharge Certificate) dates are considered for calculating days outside India.
If either sign on or sign off is in foreign ports, then passport immigration stamping dates are considered for calculating days outside India.
🔹 Notification No. 70/2015
This Central Board of Direct Taxes (CBDT) notification provides that for voyages qualifying as "eligible voyages", the period outside India is counted from the date of sign-on to the date of sign-off mentioned in the CDC. Eligible voyages include:
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Journeys starting in India and ending at a foreign port.
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Journeys starting at a foreign port and ending in India.
🔹 New Residential Status Rule – Finance Act 2020
The Finance Act 2020 introduced a new provision under Section 6(1A):
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If an Indian citizen stays in India for 120 days or more and has Indian income exceeding Rs. 15 lakh, they will be treated as Resident but Not Ordinarily Resident (RNOR).
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Importantly, foreign ship salary is excluded when calculating the Rs. 15 lakh threshold.
EXEMPTION OF SALARY RECEIVED BY NON - RESIDENT SEAFARER IN HIS NRE ACCOUNT:
According to CBDT Circular No. 13/2017, the salary of a seafarer is not taxable in India if the following conditions are met:
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The salary is earned for services rendered outside India.
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The salary is directly credited to an NRE account with an Indian bank.
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The seafarer qualifies as a Non-Resident as per the Income Tax Act (i.e. completes 184 days outside India in a financial year)
FILING OF RETURN OF INCOME:
A Non-resident seafarer is required to file Income tax Return when his total income before claiming any deductions (like LIC, Mediclaim etc.) exceeds Rs 2.5 lacs.
Also, return is required to file by the seafarer, if he has -
a) Deposited amount of 1 crores in current accounts.
b) Incurred expenditure of more than 2 lakhs for any travel to foreign country.
c) Incurred expenditure of more than 1 lakhs towards consumption of electricity.
COMMON FAQs FOR SEAFARERS TAXATION:
Q: Is it necessary for seafarers to file Income Tax Returns (ITR) in India?
A: It is highly recommended and advisable to all the Seafarers to file ITR every financial year (even if they have completed their NRI days). An ITR acts as proof of income and residence, and is useful when applying for loans, visas, or responding to tax-related queries from authorities.
Q: What are the key documents needed by a seafarer to file ITR?
A: Seafarers should keep the following documents ready while filing ITR:
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Passport copy
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CDC copy
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Employment/Ship contract
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Salary slips
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Bank statements
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Investment reports (mutual funds, shares, etc.)
These records help establish non-resident status and prove eligibility for tax exemptions.
Q: Is income earned from foreign shipping employment taxable in India?
A: No. If the seafarer is employed on a ship sailing outside India, and qualifies as an NRI, and the salary is received in an NRE account, such income is not taxable in India.
Q: When is the ITR due date for seafarers? Can they file for previous years?
A: The ITR due date for seafarers is July 31 of the assessment year (For FY 2024-25, the due date for filing ITR is extended till September 15, 2025 due to Income Tax Portal technical issues). Belated returns can be filed till 31 December 2025. Filing for earlier years is also possible.
Q: What is the 120-day rule introduced in Budget 2020, and how does it affect seafarers?
A: The rule says that Indian citizens earning more than ₹15 lakh in India and staying 120 days or more in a financial year can be considered residents. Since most seafarers earn outside India and don’t meet the ₹15 lakh condition, they are generally not affected by this rule.
Q: Is interest earned from NRE accounts taxable for seafarers?
A: No. Interest on NRE savings or fixed deposit accounts is exempt under Section 10(4)(ii) of the Income Tax Act, provided the account holder qualifies as an NRI. However, this exempt income should still be disclosed in the ITR.
Q: What kind of income must a seafarer report in the ITR?
A: Seafarers must also report any income from:
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Bank interest (NRO accounts)
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Rent from property in India
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Capital gains or dividends from mutual funds and shares
Q: Are Indian seafarers liable to pay taxes?
A: Seafarers who stay outside India for more than 184 days as per their CDC/ passport are not required to pay taxes on their salary income earned from outside India.
Q: Which is the best bank account for seafarers?
A: Seafarers can open an NRE/ NRO account in any public or private sector bank.
Q: What is the difference between NRO and NRE accounts?
A: An NRE account is used to park foreign income, while an NRO account is for managing income earned in India and is taxable.
Q: Is there any income tax exemption for Indian seafarers?
A: There is no special exemption, but general exemptions under the Income Tax Act apply as per individual cases.
