Filing Income Tax Return (ITR) for Seafarer

As per Section 139(1)(b), every individual, if his total income exceeds the maximum amount which is not chargeable to income tax shall file his return before giving any benefits of any deduction under Chapter VI-A (like LIC, medical premium, school fees etc. provided under section 80) shall furnish his return of income. Filing return of income is also mandatory, if you: –

• has deposited an amount of Rs 1 crore in one or more current accounts; or 
• has incurred expenditure exceeding Rs 2 lakh for himself or any other person for travel to a foreign country; or
• has incurred expenditure exceeding of Rs 1 lakh towards consumption of electricity; or
• fulfils such other conditions as may be prescribed.

Maximum amount which is not chargeable to tax is as follows for the financial year 2019-20 and 20-21

FAQ on filing return of income

1. I have been sailing for the last 5 years and never filed a return. Shall I start filing return?

Yes, you should file your income tax return even if the income is not chargeable to tax. The reasons are as follows: –

• Sometime seafarers are not able to complete the sea time period for claiming NR status. In that scenario, it is compulsory to file the return of income if you have a total income exceeding Rs 2,50,000. This creates a gap in the system of income tax department as you are filing the return and paying tax in a couple of years and not filing return in other years which raise the alarm in the Government system and may receive a notice for return filing. However, if you are filing returns in every year then the government will have complete records of return and can check that you are non-resident in most of the years and does not require to pay tax in India.
• ITR will be helpful in case you have some income on which TDS has been deducted. The most common is interest on NRO bank balance, purchase of car exceeding Rs 10 lakh, starting from FY 20-21 TDS will be deducted on dividend income received from Mutual funds, public companies etc.
• ITR will be helpful in case you want to apply for housing loans, purchasing life insurance, visa for a country etc.
• If you are planning to purchase a property it is mandatory to provide your PAN card for registry. The details will be shared with the IT Department and if IT Department does not find any records of yours then you may get a notice to explain the source of income for paying the property consideration.
• Your bank is required to share your various details like cash deposits, transaction exceeding specific limits, cash withdrawals with IT Department and if IT Department does not find any records of yours then you may get a notice to explain the nature of transaction.

2. I have maintained my non-resident status from last 4 years but never filed ITR. Can I get a notice for non-filing of income tax return?
   Yes, you may receive a notice for non-filing of income tax return. If you have maintained non-resident status and your total gross income from India is less than taxable limit, then it is not mandatory to file income tax return. However, it is advisable to file your income tax return irrespective of your Indian income to safe yourself from the eyes of income tax department. 

3. Salary for the month of March shall be taxable in which financial year?
   In India, the financial year runs from April to March. The running financial year is April 2019 to March 2020. As per section 15 of the Income Tax, salary is taxable on due or receipt basis, whichever is earlier. If the salary of March has been credited to your bank account in the month of March itself then it is taxable in the same year. However, if the salary is credited in April then it will be taxable only if it is due on or before 31st March 2020 irrespective of the actual payments.
   Generally, in the case of Merchant Navy, salary is due on or before 31 March and required to be added at the time of calculating income for that financial year even it is credited in the month of April.

4. I am unable to complete my non-resident status for the financial year 2019-20. What if I can take most of my salary as cash on the ship rather than sending it my bank account to save tax?
   You are required to report your total salary as income rather than the amount transferred into your bank account against salary. In case, if the filed return gets selected for scrutiny, you have to provide the salary slips, signed contract etc. to validate the deposit into your bank account.

5. In which head shall I report the salary income? I have completed my non-resident status.
   There is no option to report salary income in the income tax return as it is not an income for the purpose of income tax.

6. What is the last date for filing income tax return?

Financial year 2018-19 – The due date for filing income tax return is 31^st Aug 2019. However, the return can be filed up to 30^th June 2020 with penalty.

Financial year 2019-20 – The due date for filing income tax return is 30^th Nov 2020. The return can be filed up to 31^st March 2021 with penalty. 

7. Which income tax return form should be filed for financial year 2019-20?
   Income tax return forms get changed and updated every year. Government is yet to announce the new income tax return form for the financial year 2019-20.

8. Can I file my income tax return for financial year 2019-20 before 31^st March 2020?
   Income tax return can be filed only after the end of the financial year i.e. 31^st Mar 2020. Moreover, the income tax department releases the form and the date after which an individual can file their return which is generally around 20^th April every year.

9. I worked for an India company as Chief Engineer which is deducting my TDS @ 10% under section 194J. I am unable to complete my non-resident status during the financial year 2019-20. Shall I declare the receipt as Salary or income from profession under section 44ADA?
   Income is chargeable to tax as salary if the employer-employee relationship exists. You must review your contract to find out the correct nature of relationship and report the income in correct heading irrespective of the section in which TDS is deducted by the company.
   Assuming, the relationship is as of contractor, you can report 50% of your receipt as taxable income under section 44ADA. 

10. Assuming, in the above case, what will be scenario if I am employed by foreign company as Chief Engineer and unable to complete my non-resident days outside India?
    The answer is same. You have to review your terms of engagement and if the relationship of employer-employee exists then 100% of the income is chargeable to tax under the head salary. If there is no such relationship, then you can take the benefit of section 44ADA and pay tax on 50% of the income.