A seafarer’s income is not limited to the salary earned from sailing. Many seafarers also receive rent, business income, professional fees, investment profits, bank interest, dividends, or other income during the year. Even if your salary receives a particular tax treatment because of your residential status, these additional sources of income must also be considered separately while calculating your taxable income and filing your Income Tax Return in India.
Many seafarers focus only on whether their sailing salary is taxable in India. However, your final tax position can also depend on income earned from property, investments, business activities, bank deposits, dividends, and other sources. Whether foreign income is taxable in India can further depend on whether you are treated as a resident or non-resident for that financial year.
If you own a residential flat, house, shop, office, or other property and receive rent from it, that rental income may fall under Income from House Property. A seafarer who earns rental income should therefore include it while reviewing the total income for the financial year.
If the property is situated in India, the rental income is generally treated as Indian income and may be taxable in India according to the applicable rules. If the property is located outside India, it may be treated as foreign income, and its Indian tax treatment can depend on the seafarer’s residential status for that year.
Foreign income should not automatically be treated in the same way for every seafarer. A person classified as a resident and a person classified as a non-resident can have different tax treatment for income earned outside India.
For example, a seafarer owning a property abroad and receiving rent from it should first determine the residential status for that financial year. That status can affect whether the foreign rental income needs to be considered for taxation in India.
Some seafarers also run businesses or earn professional income when they are ashore. You may be a proprietor, partner, director, consultant, freelancer, or provide another professional service in India. Income from such activities may fall under Income from Business or Profession.
For example, if a seafarer delivers paid lectures at maritime colleges, provides consultancy services, works as a freelancer, or operates a business while on leave, the money earned from those activities may need to be reported separately from the sailing salary.
It is becoming increasingly common for professionals to have multiple sources of income. A seafarer may spend several months onboard and use the remaining months to run a business, provide consulting services, teach, or work independently.
Such income does not become irrelevant simply because the person’s primary profession is sailing. The nature and source of every income should be identified properly while preparing the Income Tax Return.
Seafarers often invest a part of their sailing income in shares, mutual funds, real estate, gold, jewellery, and other assets. When an investment is sold for a gain, the profit may fall under the head Income from Capital Gains.
The tax treatment can depend on the type of asset and how long it was held before being sold. This is why seafarers should maintain proper purchase and sale records instead of looking only at the amount credited into the bank account after selling an investment.
Under the holding-period framework discussed here, real estate and certain other assets may be treated as short-term when held for less than 24 months and long-term when held for more than 24 months.
For stocks and mutual funds, the period discussed is 12 months. Shares held for less than one year may therefore be considered short-term, while those held for more than one year may fall into the long-term category, depending on the applicable rules and type of investment.
Capital gains are not limited to the stock market. Selling a property, gold, jewellery, or another investment asset at a profit can also create capital-gain income.
Seafarers who invest regularly should therefore keep purchase documents, sale statements, broker records, and other transaction details. These records can become important when calculating the gain and preparing the tax return.
Another major category is Income from Other Sources. This category can include income that does not fall naturally under salary, house property, business or profession, or capital gains.
For seafarers, common examples include interest from bank accounts and fixed deposits, dividends, family pension, and certain winnings. These amounts can easily be overlooked because they may be credited automatically into the bank account.
Seafarers may maintain different types of bank deposits and accounts, including FCNR deposits, NRE deposits, NRO deposits, and NRO savings accounts. Interest received from these sources should be reviewed according to the applicable tax treatment of the specific account and the seafarer’s circumstances.
Do not assume that every type of bank interest receives the same tax treatment. Account type, residential status, and applicable tax rules can make a difference.
A seafarer investing in shares or mutual funds may also receive dividends. Such income should be considered when reviewing the total income for the year and preparing the tax return.
Family pension received after the death of a person on whom the recipient was dependent can also fall under Income from Other Sources. Winnings from lotteries, games, and similar activities may also be included under this category depending on the applicable rules.
One common misunderstanding among seafarers is that maintaining non-resident status automatically means there is no need to file an Income Tax Return. This can be risky because the tax position should not be decided only by looking at sailing salary.
Even when salary may receive favourable treatment based on residential status and applicable conditions, the seafarer may still have rental income, business income, capital gains, interest, dividends, or other Indian income. All relevant income should therefore be reviewed before deciding whether an ITR is required.
Even where income is below the applicable taxable limit, filing an Income Tax Return may still be useful in some situations. A properly filed return can help maintain a clear record of residential status, income details, and financial transactions reported to the Income Tax Department.
This can become particularly useful when a seafarer has investments, property transactions, bank deposits, or other financial activity during the year.
The Income Tax Department may receive information from third parties regarding transactions such as property purchases or sales, investments in shares or mutual funds, fixed deposits, insurance policies, and other financial activities.
If the information available with the department does not match what is reported in the Income Tax Return, questions, mismatches, scrutiny, or notices may arise. Reporting applicable income correctly can therefore help maintain consistency in your tax records.
Do not calculate your tax only by looking at your sailing salary. Review rental income, business or professional income, capital gains, bank interest, dividends, family pension, and other income before deciding your final tax position or whether an ITR should be filed. Keep proper records and take professional tax advice whenever your income structure becomes complicated. Seafarers can also explore Sailor Pro app for practical guidance that helps them stay more organised with taxation, finances, and other important aspects of their sailing career.
A seafarer may earn rental income, business or professional income, capital gains, bank interest, dividends, family pension, and other income apart from sailing salary.
Rental income from property situated in India is generally considered Indian income and may be taxable according to the applicable rules. Foreign rental income can depend on the seafarer’s residential status.
Profits earned from selling shares, mutual funds, or other investments may be treated as capital gains. The applicable tax treatment can depend on the asset and holding period.
Interest from NRO accounts should be considered according to the applicable tax rules. Seafarers should review the treatment of each type of bank account separately.
Dividend income should be considered while calculating the seafarer’s total income and may be taxable according to the applicable provisions.
NRI or non-resident status alone does not decide whether an ITR is required. Other Indian income, capital gains, investments, and applicable filing conditions should also be considered.
Yes, all applicable income should be correctly considered and reported under the appropriate income head when preparing the Income Tax Return.
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