Which one of the following is NOT correct for Tonnage Tax System?

Correct option is C

TheTonnage Tax Systemis apresumptive taxation scheme(Option 1 is correct) designed for shipping companies to compute their taxable income based on the tonnage of their ships rather than their actual profits.

• Option 2is correct because it applies specifically to income derived fromshipping activities(operating qualifying ships).

• Option 4is correct because the computation of tonnage income is indeed governed underSection 115VGof the Income Tax Act, 1961.

• Option 3 is incorrectbecause the Tonnage Tax System isonly available to Indian companiesengaged in shipping operations.Foreign companiesarenot eligiblefor this scheme.

Thus, the statement that the Tonnage Tax System is applicable toboth Indian and foreign companiesisnot correct.