Cruise Ships explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 44BBC taxes a non-resident operating cruise ships on 20% of specified passenger-carriage amounts from A.Y. 2025-26, subject to the Rule 6GB conditions. Section 44BBD applies the same 20% to a non-resident supplying services or technology for electronics manufacturing from A.Y. 2026-27.
From the ICAI Guidance Note on Tax Audit (Revised 2026), the concluding edition under the Income-tax Act, 1961. Both provisions are recent additions to the 1961 Act; for tax years under the Income-tax Act, 2025 the corresponding presumptive provisions and the audit report — Form No. 26 under rule 47 of the Income-tax Rules, 2026 — must be checked against the new statute.
Why these two sections appear in a tax audit
Both are reportable at clause 12 of Form No. 3CD. Section 44BBC was specifically included in the clause 12 list with effect from A.Y. 2025-26. Section 44BBD, inserted by the Finance Act, 2025 with effect from A.Y. 2026-27, is cited by the Guidance Note as the example of what falls under clause 12's residual head "any other relevant section".
Section 44BBC — cruise ships
Eligible assessee and eligible business
A non-resident engaged in the business of operation of cruise ships and fulfilling the conditions prescribed in Rule 6GB:
- operate a passenger ship having a carrying capacity of more than two hundred passengers, or length of seventy-five metres or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers;
- operate such ship on a scheduled voyage or shore excursion touching at least two sea ports of India, or the same sea port of India twice;
- operate such ship primarily for carrying passengers and not for carrying cargo; and
- operate such ship as per the procedure and guidelines, if any, issued by the Ministry of Tourism or Ministry of Shipping.
The recipient of services is the passengers of the ship.
What is taxed
The presumptive income is a sum equal to 20% of the aggregate of the amounts specified in sub-section (2), deemed to be profits and gains of business or profession. Those amounts are the aggregate of:
- (i) the amount paid or payable to the assessee or to any person on his behalf on account of the carriage of passengers; and
- (ii) the amount received or deemed to be received by or on behalf of the assessee on account of the carriage of passengers.
The assessee cannot claim that his income is lower than the presumptive income.
Capacity or length is verifiable from the ship's registry; the two-Indian-port requirement and the primarily passengers, not cargo requirement have to be established from the voyage schedule and the manifest. A vessel that carries passengers on a route touching only one Indian port does not satisfy Rule 6GB, and the presumptive basis is not available for cruise ships in that position.
Section 44BBD — services and technology for electronics manufacturing
Eligible assessee and eligible business
A non-resident engaged in the business of providing services or technology:
- for setting up an electronics manufacturing facility in India; or
- in connection with manufacturing or producing electronic goods, articles or things in India.
Recipient of the services
A resident company:
- (a) which is establishing or operating an electronics manufacturing facility, or a connected facility for manufacturing or producing electronic goods, articles or things in India, under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology; and
- (b) satisfying the prescribed conditions.
What is taxed
Again 20% of the aggregate of the amounts specified in sub-section (2):
- (i) the amount paid or payable to the non-resident assessee, or to any person on his behalf, on account of providing services or technology; and
- (ii) the amount received or deemed to be received by, or on behalf of, the non-resident assessee on the same account.
Note: the provisions of section 44DA or section 115A shall not apply in respect of the amounts referred to in (i) and (ii).
The assessee cannot claim lower income, and set-off of unabsorbed depreciation and brought forward business loss is not allowable.
The two side by side
| Section 44BBC | Section 44BBD | |
|---|---|---|
| Effective from | A.Y. 2025-26 | A.Y. 2026-27 |
| Assessee | Non-resident operating cruise ships meeting Rule 6GB | Non-resident providing services or technology for electronics manufacturing |
| Payer | Passengers | A notified-scheme resident company |
| Rate | 20% of specified amounts | 20% of specified amounts |
| Claim lower income? | No | No |
| Set-off of unabsorbed depreciation and brought forward loss | — | Not allowable |
| Sections 44DA / 115A | — | Shall not apply to the specified amounts |
| Clause 12 reporting | Named in the clause from A.Y. 2025-26 | Under "any other relevant section" |
Sections 44AB(c), (d) and (e) are built on an assessee claiming income lower than the deemed profits. Because neither of these two sections permits that claim, neither generates an audit obligation by that route. Where a non-resident within these provisions is audited, it is under section 44AB(a) on turnover, or under the third proviso if audited under another law.
Worked example
| Item | Amount | Treatment |
|---|---|---|
| Fares paid by passengers directly to the non-resident operator of cruise ships | Rs 210 crore | Included in sub-section (2) |
| Fares paid to an Indian agent on the operator's behalf | Rs 46 crore | Included — "paid or payable … to any person on his behalf" |
| Onboard cargo revenue | Rs 2 crore | Outside the carriage-of-passengers head; and a vessel not operated primarily for passengers would fail Rule 6GB altogether |
| Presumptive income | 20% × Rs 256 crore | Rs 51.2 crore |
At clause 12, the amount reported is the profit from this business included in the profit and loss account — not the Rs 51.2 crore deemed figure.
Audit checklist
- Establish non-residence before applying either section.
- For cruise ships, test all four Rule 6GB conditions against the registry, voyage schedule, manifest and the Ministry guidelines.
- Aggregate amounts paid or payable and received or deemed received, including through agents.
- For section 44BBD, verify the payer is a resident company under the MeitY-notified scheme and satisfies the prescribed conditions.
- Do not apply section 44DA or 115A to the section 44BBD amounts.
- Deny set-off of unabsorbed depreciation and brought forward loss under section 44BBD.
- Report at clause 12 the profit and loss account figure, with the section stated.
Common mistakes
- Applying section 44BBC to cruise ships that do not meet every Rule 6GB condition.
- Omitting amounts collected by agents from the sub-section (2) aggregate.
- Applying section 115A to fees within section 44BBD.
- Allowing a brought-forward loss set-off under section 44BBD.
- Reporting the deemed 20% figure at clause 12 instead of the book profit.