Section 228 - Relevant shipping income and exclusion from book profit
The commercial label “shipping income” is too broad. Every revenue stream must be mapped to core, prescribed incidental or non-tonnage categories.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 228 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier tax years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
The commercial label “shipping income” is too broad. Every revenue stream must be mapped to core, prescribed incidental or non-tonnage categories.
Who should use this section
Shipping and inland-vessel groups, finance controllers and tax reviewers applying the tonnage-tax scheme, where vessel eligibility, certificates, charter structure, activity classification and reserve/audit evidence affect section 228.
How section 228 works in practice
Section 228 sits in Chapter 13 (Determination of Tax in Special Cases) and should be read as a connected rule rather than an isolated label. The practical question is whether the facts actually satisfy the trigger for “Relevant shipping income”. For section 228, build a vessel-level evidence trail before computing tonnage income. For section 228, match ownership or charter status, certificates, net/deemed tonnage, operating days and activity codes to the statutory scheme. A commercial shipping label is not enough: the tonnage-tax result for relevant shipping income depends on the legal classification of each vessel, activity and reserve/audit condition. The operating controls are: Create revenue-code mapping by statutory activity; Apply incidental-income limits; Test related-party market value and excess profit. A reviewer should record why create revenue-code mapping by statutory activity., because that conclusion drives the downstream computation, reporting or procedural consequence.
Old-law bridge
section 115VI
The old-law bridge is a research aid, not an automatic precedent transfer. Match the old provision, the current section, saved proceedings and effective dates before importing an older interpretation.
Finance Act 2026 / current-law note
Finance Act, 2026 extends the specified on-board / on-shore passenger activity limb of relevant shipping income to inland vessels. Revenue mapping must therefore distinguish qualifying inland-vessel activity from other incidental receipts.
Professional alert
Create revenue-code mapping by statutory activity. Apply incidental-income limits. Test related-party market value and excess profit.
Connected Income-tax Rules, 2026 and Forms
Worked application
A tonnage company earns vessel-management fees and port consultancy income. Rule 146 identifies prescribed incidental activities, but the statutory limit must also be tested.
Evidence / compliance checklist
- Create revenue-code mapping by statutory activity.
- Apply incidental-income limits.
- Test related-party market value and excess profit.
- Maintain vessel and certificate records specifically supporting section 228.
- For section 228, reconcile operational days, charter terms and activity classification to the tonnage computation.
- Link section 228 reporting to the tonnage-tax option/audit evidence where applicable.
Common mistake
Assuming every shipping receipt or vessel belongs inside section 228. Section 228 requires its own legal vessel/activity classification, valid certificates and compliance with the option, reserve, training or audit conditions that apply to that provision.
Recommended approach
For section 228, create a one-page legal-to-evidence matrix. For section 228, put the current statutory condition in the first column, the transaction or procedural fact in the second, the supporting document in the third, and the tax/procedural consequence in the fourth. The first checkpoint should be: Create revenue-code mapping by statutory activity. This section 228 matrix makes reviewable differences visible before a return, opinion, notice response or litigation position is finalised.
Thresholds, rates, periods and timing checkpoints
- Section 228 has no standalone numeric checkpoint extracted for this register; use the official consolidated text for any amount, period or rate appearing in a fact-specific sub-clause.
Related provisions and interaction map
Section 228 belongs to the tonnage-tax chain spanning operating status, qualifying vessel definitions, tonnage computation, relevant shipping income, option, reserve/training conditions, amalgamation/demerger and exit. A vessel master should connect section 228 to the same certificate and operational-day data used across the tonnage-tax chain.
Direct navigation / cross-checks: section 227, section 229
Validated statutory core - official current source controlled
Text-status note: This page presents a validated operative statutory core rather than pretending a summary is verbatim law. Use the linked official consolidated Act before quoting sub-section language in a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Finance Act 2026 amendment materials: Official Notes on Clauses
Forms guidance: Official FAQs / Guidance Notes on Income-tax Rules, 2026 forms
Quoting note: The official consolidated Act controls verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 decision automatically decide section 228?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which source should be quoted in advice or litigation?
Quote the official consolidated statute for the relevant tax year. Where this page presents a validated statutory core rather than complete verbatim text, use the official Act for sub-section wording.
What should be checked immediately before acting?
Re-check the current statutory text, the section-specific Rule/Form mapping and any notification or court order relevant to the exact facts. Section 228 should not be applied from a historic section number or a generic tax summary alone.