The issue of whether the salary of a non-resident seafarer, which was earned for services rendered outside of India, would be included in the total income of the assessee is a matter of legal concern. Despite the fact that the assessee mistakenly indicated that the salary had accrued in India while filing their income tax return, the law is in favor of the assessee. This is supported by various circulars released by the Central Board of Direct Taxes (CBDT).
Circular No. 13/2017, dated April 11, 2017, is a clear indication of this principle. In this circular, it was explicitly stated that the salary received by a non-resident seafarer for services rendered on a foreign ship shall not be considered as part of the total income, even if it was credited in a non-resident external (NRE) account held with an Indian bank by the seafarer. This circular is a directive to the Assessing Officer, who should grant the relief to the assessee by excluding the foreign income received by the seafarer under section 10(6)(viii) of the Indian Income Tax Act.
This principle was upheld in the landmark case of Rajeev Biswas v. Union of India (2022) 143 taxmann.com 3 (Cal.). In this case, the court ruled that the income of the non-resident seafarer should not be included in the total income, as it was earned for services rendered outside of India. The fact that the assessee mistakenly indicated that the salary had accrued in India while filing their return of income was not considered to be a significant factor in this case.
It is important to note that the legal provisions regarding the taxation of non-resident seafarers are subject to change over time. It is crucial for the assessee to stay updated on any changes in the law and to seek the assistance of a qualified professional if needed. This is particularly important for non-resident seafarers who are not familiar with the Indian tax system, as they may not be aware of their rights and obligations under the law.
In conclusion, the salary earned by a non-resident seafarer for services rendered on a foreign ship is not considered as part of the total income of the assessee, as per the provisions of the Indian Income Tax Act. This is based on the circulars issued by the CBDT and the court ruling in the case of Rajeev Biswas v. Union of India (2022). As such, the assessee can be confident that their foreign income will not be taxed in India, even if they mistakenly indicated that it had accrued in India while filing their return of income