Taxation of Seafarers and Merchant Navy Workers in India - 2026

Who qualifies as a Seafarer or Merchant Navy Worker in Income Tax Act?

To begin with, it is fundamentally important to clarify that the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), does not strictly define or recognize specific occupational terms such as ‘Seafarer’ or ‘Merchant Navy’ within its statutory clauses. Consequently, there are no exclusive provisions, special sections, or specific exemptions explicitly written into the Income Tax Act that target the category of ‘Seafarer’ or ‘Merchant Navy’ personnel in isolation.

In the broader context of general terminology, a Seafarer or a Merchant Navy Worker is comprehensively defined as an individual who is employed to work aboard or travel upon a boat, ship, or other marine vessels operating on the seas. A Seafarer is a professional who is tasked with navigating a sea-going vessel or assisting as an essential crew member involved in the day-to-day operation, technical management, and maintenance of the ship as mandated by the terms of their contractual employment.

The Basis of Taxation: Residential Status The Income Tax Act of India establishes the framework for tax liability primarily based on the Residential Status of an individual taxpayer, regardless of whether that individual is employed as a Seafarer, a Merchant Navy Worker, or in any other profession. Therefore, the determination of a seafarer’s final tax liability is strictly calculated and dependent upon their specific residential status during the financial year, rather than their job title.

Citizenship vs. Residential Classification Typically, the vast majority of seafarers and merchant navy workers are Citizens of India; however, for tax purposes, they are classified as either a Non-Resident or a Non-Resident Indian (NRI) based solely on the aggregate count of days they physically stay within the geographical boundaries of India.

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Seafarers, Mariner, Merchant Navy Workers, NRI and Foreign Citizens ITR Filing in India – Essential Information

1. Resident & Ordinary Resident Seafarer (ROR) – Global Income Taxability

The 182-Day Rule for Residency Similar to the rules applicable to any other Indian citizen, if a seafarer remains physically present in India for a duration of 182 days or more within a single financial year, they shall legally be considered a Resident in India for tax purposes. 

Scope of Tax on Global Income Furthermore, if this individual is also categorized under the sub-status of an ‘Ordinary Resident,’ the law mandates that their entire global income—earned anywhere in the world—shall be subject to taxation within India. Consequently, in the specific case of a seafarer who qualifies as a ‘Resident & Ordinary Resident’ (R&OR) in India, any income derived from their employment and duties performed on a ship will be fully taxable under Indian tax laws. It is important to note, however, that the final taxability may still be influenced or modified by various other subject matters, such as Double Taxation Avoidance Agreements (DTAA).

2. ‘Non-Resident Seafarer’ (NR) Status

Criteria for Non-Resident Status If a seafarer manages their schedule such that their stay in India amounts to less than 182 days during a specific financial year, they are officially considered a Non-Resident in India for that fiscal period.

Exemption on Foreign Income In this specific scenario where the individual qualifies as a Non-Resident, the Seafarer’s foreign income—which explicitly includes the salary and income earned for services provided on a foreign-going ship—will legally be exempt from taxation in India.

Requirement for NRE Accounts (CBDT Circular) However, it is crucial to adhere to the guidelines issued in the CBDT Circular of April 2017, which stipulates that to avail of this benefit smoothly, the seafarer must ensure that they receive their foreign salary income directly into a Non-Resident External (NRE) account rather than a standard savings account.

3. Not Ordinary Resident Seafarer (NOR)

Transitional Residency Status There are circumstances where a person, including a Seafarer, may end up staying in India for more than 181 days, thereby technically becoming a Resident in India for that year. However, based on an analysis of their residential records over the preceding years (often looking at the past decade), they may still be eligible to be categorized as a ‘Not Ordinary Resident’ (NOR).

Tax Implications for NOR Status In this unique category, after taking into consideration the various specific facts and circumstances surrounding the seafarer's employment and stay, their foreign income—including the income earned from working on a ship—may still remain non-taxable in India, similar to the benefits enjoyed by Non-Residents.

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Budget 2020 New Residential Rule of 120 Days Stay in India – Tax Impact on Ship Workers, Seafarers, Merchant Navy Employees

As per the earlier rules, a person (including Ship workers) were categorised as Resident In India on the basis of stay in India for 182 days or more. And since generally seafarers keep their Ship Schedule in such way that they sail into sea for 185 days or more. In this way, in may cases they used to spent time in India for 4-6 months (but less than 182 days). In general, they stay in India for more than 120 days to keep off from ship and stay with family in India.

Budget 2020, has introduced new provisions in Residential Status Guidelines. Now, a person (including Ship Worker), who is citizen of India, can be categorized as Resident in India if his stay in India exceed 119 days (i.e. 120 days or more) in a financial year. This harsh rule can be a gamechanger in the taxability of merchant navy employees and seafarers, if they are categorised as Resident in India under the new Tax Rule of Residency.

However, here is a catch in the law. As per the final print of the law (as passed by the Parliament), the new rule of 120 days rule is applicable to those whose Total Taxable Income in India exceeds Rs 15 Lakh. In case of Ship workers, in general, the taxable income in India of most of Seafarers or Merchant Navy Employees does not exceed Rs 15 Lakh. Hence, NRI ship workers (Seafarers) are still eligible to be determined as per 182 days Residency rule and 120 days rule will not apply on them. Here it is important to note that for the purposes of calculation of Rs 15 Lakh, their ship income will not be included.

Further, even if a seafarer qualifies the 120 days clause (on the basis of his income in India exceeding Rupees 15 Lakh), and categorised as Resident in India, as per the new NOR Rules he will be categorized as Not Ordinary Resident (NOR) in that financial year.

Hence, in nutshell, 120 days new Residential Rule is not going to impact Ship Employees (Seafarers, Mariner, Merchant Navy Employees). However, a proper advise, as per the facts, must be sought to avoid any tax litigation.

Receipt of Income outside India vs Taxability – Seafarer NRE Bank Account

As per the provisions of Income Tax Act, taxability in India is connected with receipt of income in India also. Hence, to avoid taxability in India, besides Residential Status, one need to ensure that Income is received outside India. As per the CBDT clarification in relation to Seafarer or Merchant Navy Employees, income received in NRE account is considered as income received outside India. Hence, Seafarers/Mariners/Merchant Navy Workers can open an NRE bank account with bank and receive their salary or income from working on ship in that bank account to claim the taxability exemption under Income Tax Act.

CBDT Circular no 13/2017 for Seafarer, Mariner, Merchant Navy Workers/Employees

This is a very important and fundamental Circular in relation to deciding taxability of Seafarer or Merchant Navy or any other person working on ship. As per this circular, the salary earned in relation to services on ship (i.e. accrued outside India) shall not be taxable in India. However, the conditions of non-taxability of such income of Seafarers are as under:

• Salary is accrued/earned outside India. Salary is in relation to services on (i.e. accrual of salary) on a foreign ship.
• Salary is duly received in Non Resident External (NRE) bank account with a Bank in India. This means that Salary cannot be received in a bank account other than NRE Bank Account to claim this exemption.
• The individual, who earns above salary, is a Non-Resident in India as per the provisions of the Act.

This circular clarifies that for seafarers, just receipt of income in NRE Bank Account will not attract tax provision of ‘Received in India’. This circular provides a big relief and create a tax relief bridge for Individual Seafarers, which avoids unnecessary litigation for NRI Seafarer in India, which was arising a lot by the income tax department before this circular. Circular important is this that it bound the Income Tax Department to follow it, though the Seafarer is still open to seek further tax benefit in addition to this circular as provided in other provisions of law or judicial pronouncements.

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Frequently Asked Questions (FAQs) Wrt Seafarer Taxation in India