The Tonnage Tax Scheme, seen in Union Budget 2025-26, is associated with taxing which sector?

Correct option is D

The correct answer is (d) Shipping activities

Explanation:

• The Tonnage Tax Scheme is a special taxation scheme related to the shipping sector.
• It is designed to simplify the taxation of income earned by shipping companies and encourage the growth of India’s shipping industry.
• Under the Tonnage Tax Scheme, shipping companies are taxed based on the tonnage (weight) of the ships they operate, rather than the traditional method of taxing profits.
• The scheme aims to reduce the tax burden on shipping companies and promote the Indian maritime industry, making it more competitive globally.

Information Booster:

• The scheme applies to Indian shipping companies and is part of the government’s efforts to boost the maritime sector.
• The Tonnage Tax is a fixed amount that is calculated based on the net tonnage of the fleet of ships operated by a shipping company, providing a predictable tax liability for the company.

Additional Knowledge:

(a) Telecom companies

• Telecom companies are subject to different taxation rules, including those related to licensing fees and service taxes, but they are not covered under the Tonnage Tax Scheme.

(b) Manufacturing companies

• Manufacturing companies are generally subject to the regular corporate tax regime, which is based on the profits they earn, not tonnage.

(c) Digital companies

• Digital companies are taxed under the regular corporate tax laws, and the Tonnage Tax Scheme does not apply to them.