The ships should be operated primarily for carrying passengers and not carrying cargo.
The CBDT also clarified that in order to avail the presumptive taxation benefit, such ships should be operated as per the procedures and guidelines issued by the Ministry of Tourism or Ministry of Shipping.
Under the presumptive taxation regime, the tax department presumes a certain proportion of the turnover as taxable income. Presumptive taxation is applicable to small businesses and professionals such as chartered accountants and doctors.
As per the rules, small business earning less than Rs 3 crore and professional earning less than Rs 75 lakh are eligible for presumptive taxation.
Businesses eligible for presumptive taxation must declare profits of 8% of turnover or gross receipts for non-digital transactions, or 6% for digital transactions, whichever is applicable. Professionals with up to Rs 50 lakh annual income can show 50% as taxable income.
Further, the income tax department has provided exemption for any income of a foreign company from lease rentals of cruise ships, received from a related company in India.