Section 115VT of ITA, 1961 : Section 115Vt: Transfer Of Profits To Tonnage Tax Reserve Account

Explanation using Example

Imagine a shipping company, Oceanic Transports Ltd., which operates under the tonnage tax scheme as per the Income-tax Act, 1961. In the financial year 2022-2023, Oceanic Transports Ltd. earns a book profit from its shipping operations. According to Section 115VT of the Income-tax Act, the company is required to allocate at least 20% of this book profit to a Tonnage Tax Reserve Account.

Let's say the book profit is INR 10 million. The company must transfer at least INR 2 million into the reserve account. Oceanic Transports Ltd. decides to allocate INR 3 million (30%) to the reserve account, which is more than the minimum required, ...

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