The relaxation of cabotage rules without settling the taxation issue will favour foreign and private players at the cost of Indian national shippers, a Kolkata-based chamber of commerce said.
“It would benefit private players and private ports while Indian National Shipping owners would bear the brunt with no ease on taxation. So before this relaxation, there should have been a level playing field as far as taxation is concerned,” co-chairperson of the Shipping Committee of the Bengal Chamber S Hajara said in a statement.
Cabotage is a term of maritime law. It refers to transit of a vessel along the coast of a nation for trade from one port to another within the territorial limits of that nation.
The ministry of shipping had relaxed the rules on cabotage in 2018 and one major area of concern for the domestic shipping companies is freight.
In case of import cargo transportation services if an overseas consigner appoints an Indian shipping company GST is levied at five percent since the place of supply of services is in India. On the other hand, if the consignor appoints a foreign shipping line for the same purpose GST is not applicable as the shipping company is not registered in India for GST.
The Bengal Chamber is opening a mediation centre for settling maritime conflicts with the assistance of the legal committee members.
“This would be of immense help to managers in this sector to settle matters amiably following a shorter route and avoiding the long drawn process of going to courts,” Hajara, the former Shipping Corporation of India Ltd. chairman, said.
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