ITR filing: All merchant navy officials, who qualify as Non-Resident Indians (NRI) under the Income Tax Act in India, are exempt from paying taxes on their income.
A merchant navy personnel working under any company based in India, or abroad, is considered an NRI if they spend 182 days or more outside India in a financial year. In such cases, the salary earned for services rendered outside India and credited into a Non-Resident External (NRE) account is not taxable in India.
Therefore, one question is always there – do merchant navy officers need to file ITR? Experts say yes. Here’s why
Should merchant navy officers file ITR?
Even if salary from foreign ships is exempt, other sources of Indian income—such as rental income, capital gains, or NRO interest—are still taxable in India. In such cases, mariners possessing the same, are required to file ITR, CA Shefali Mundra, Tax Expert at ClearTax told Mint.
NRO interest refers to the interest earned on a Non-Resident Ordinary (NRO) account, which is a bank account for Non-Resident Indians (NRIs) to manage income earned in India, such as rent, dividends, and pensions
For instance, interest on NRE (Non-Resident External) accounts and NRE fixed deposits is fully tax-free, but interest on NRO accounts accounts are taxable in India and TDS is deducted at 30 per cent.
Similarly, capital gains from property sales or mutual fund investments in India are taxed under long-term or short-term rules, while rental income from properties and dividends from Indian companies also remain taxable.
The last date to file an income tax return for FY 2024-25 is September 15.
Can mariners reduce TDS on NRO deposits?
For NRO deposits or capital gains, mariners can claim Double Tax Avoidance Agreement (DTAA) benefits if they are tax residents of another country, which can significantly reduce TDS rates.
Officers can also apply for a lower TDS certificate (Form 13) to avoid excess tax deduction at source, especially in cases like property sales where standard TDS is high.
In addition, investments eligible under Sections 80C, 80D, and 80G can reduce taxable income for resident mariners.
No Indian income – do I still need to file ITR?
Even if foreign ship salary is exempt, Mundra strongly advises merchant navy officers to file their Income Tax Returns, even if they do not have capital gains, other sources of Indian income.
“Filing helps them formally declare exempt income, ensures smooth repatriation of funds, and is often necessary for purposes like visa applications, loan approvals, or scrutiny by authorities,” Shefali Mundra told Mint.
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