Section 230 - Exclusion of deduction, loss, set off, etc
Tonnage tax ring-fences qualifying business. Normal business losses or expenses cannot be casually shifted into or out of the deemed-income lane.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 230 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
Tonnage tax ring-fences qualifying business. Normal business losses or expenses cannot be casually shifted into or out of the deemed-income lane.
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 230.
How section 230 works in practice
Section 230 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 “Exclusion of deduction, loss, set off, etc.”. For section 230, build a vessel-level evidence trail before computing tonnage income. For section 230, 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 exclusion of deduction, loss, set off, etc. depends on the legal classification of each vessel, activity and reserve/audit condition. The operating controls are: Maintain segmental books and allocation keys; Prevent duplicate depreciation or loss claims; Track pre-option and post-option losses separately. A reviewer should record why maintain segmental books and allocation keys., because that conclusion drives the downstream computation, reporting or procedural consequence.
Old-law bridge
sections 115VL and related provisions
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.
Current-law control
No separate Finance Act 2026 delta is recorded for section 230 in the current-law register. The page therefore follows the consolidated Act wording and the current Rules mapping, with the official consolidated statute controlling if a later notification or amendment affects the provision.
Professional alert
Maintain segmental books and allocation keys. Prevent duplicate depreciation or loss claims. Track pre-option and post-option losses separately.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| No provision-specific Rule/Form is directly mapped in this tranche. Apply the section itself and test any separate Rule only where another provision expressly cross-refers to it. | ||
Worked application
A company has tonnage business and logistics business. Shared head-office cost and losses must be allocated under the statutory rules, not entirely against normal income.
Evidence / compliance checklist
- Maintain segmental books and allocation keys.
- Prevent duplicate depreciation or loss claims.
- Track pre-option and post-option losses separately.
- Maintain vessel and certificate records specifically supporting section 230.
- For section 230, reconcile operational days, charter terms and activity classification to the tonnage computation.
- Link section 230 reporting to the tonnage-tax option/audit evidence where applicable.
Common mistake
Assuming every shipping receipt or vessel belongs inside section 230. Section 230 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 230, create a one-page legal-to-evidence matrix. For section 230, 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: Maintain segmental books and allocation keys. This section 230 matrix makes reviewable differences visible before a return, opinion, notice response or litigation position is finalised.
Thresholds, rates, periods and timing checkpoints
- Section 230 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 230 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 230 to the same certificate and operational-day data used across the tonnage-tax chain.
Direct navigation / cross-checks: section 229, section 231
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
Quoting note: The official consolidated Act controls verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 decision automatically decide section 230?
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 230 should not be applied from a historic section number or a generic tax summary alone.