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Seafarer/Merchant Navy Officer Income Tax Filing

A seafarer is a professional engaged in working aboard watercraft such as ships, typically responsible for navigation, operations, or maintenance under a contractual arrangement.

How Is Income Tax Filing Different for Seafarers in India?

 The taxation of seafarers in India, like any other individual, is determined by their residential status under the Income Tax Act, 1961:

  • Resident & Ordinary Resident (ROR): If a seafarer spends 182 days or more in India during a financial year, their total global income is subject to tax in India.
  • Non-Resident (NR): If the stay in India is less than 182 days, any income earned outside India, including earnings from ship employment, is not taxable in India.
  • Not Ordinarily Resident (NOR): In certain cases, a seafarer may be classified as NOR, where specific conditions can allow exemption of global income from taxation.

Impact of the New 120-Day Rule

The 2020 Budget introduced the 120-day rule for Indian citizens whose taxable income in India (excluding ship income) exceeds ₹15 lakh. Key points include:

  • If a seafarer’s taxable income in India is below ₹15 lakh, the 182-day rule continues to apply.
  • For income above ₹15 lakh, the 120-day rule may classify them as a Resident, but usually as a NOR, meaning ship income can still remain exempt.

CBDT Circular 13/2017 – A Significant Update

 According to this circular, earnings from employment on a foreign vessel that are credited directly into an NRE account are treated as income received outside India and are exempt from Indian tax. To claim this relief, ensure your salary is credited to your NRE account.

Counting Days Outside India (Rule 126)


The Continuous Discharge Certificate (CDC) is used to verify the duration of stay. For eligible voyages, days between sign-on and sign-off are excluded from the calculation, ensuring accurate determination of residential status.

Bank Accounts
Non-Resident seafarers are permitted to maintain only NRO and NRE accounts in India.

Why File an ITR If Income Is Exempt?
ITR filing remains important as it serves as proof for financial transactions, supports visa or loan applications, and prepares you for any potential tax queries. Salary from a foreign ship credited to an NRE account must be reported under exempt income. Interest on NRE accounts is also exempt under Section 10(4)(ii) and should be disclosed similarly. Other income such as capital gains, rental income, or dividends from Indian investments is taxable and should be reported under the relevant heads.

Maintaining Records
Keep all relevant documents, including bank statements, investment proofs, and CDC records, organized. Large exemption claims in ITR may attract future scrutiny from the income tax department.

Frequently Asked Questions (FAQs)

Q1. Do seafarers have to pay tax on income earned on a foreign ship?
If classified as a Non-Resident under the Income Tax Act, income from a foreign ship is not taxable in India, provided it is received outside India, such as in an NRE account.

Q2. How is residential status determined for seafarers?
Residential status is based on the number of days spent in India during a financial year, using the 182-day rule or, in certain cases, the 120-day rule for those earning more than ₹15 lakh in India (excluding ship income).

Q3. Is filing an ITR necessary for seafarers if income is exempt?
Yes. Filing an ITR acts as proof of income, helps in financial transactions like loans or visas, and keeps you prepared for any queries from tax authorities.

Q4. What documents should a seafarer keep for tax purposes?
Key documents include the Continuous Discharge Certificate (CDC), bank statements, proof of NRE/NRO accounts, investment summaries, and any other records supporting exemption claims.

Q5. Are NRE account interest earnings taxable?
No. Interest earned on an NRE account is exempt from tax under Section 10(4)(ii) but must be disclosed under exempt income in the ITR.

Q6. What happens if a seafarer has other income from India?
Income from Indian sources like rent, dividends, or capital gains is taxable in India and must be declared in the respective sections of the ITR.

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