Section 115VR - Renewal of Tonnage Tax Scheme

Section 115VR of the Income-tax Act, 1961 deals with renewal of an approved tonnage tax option for qualifying shipping companies. It sets the renewal window and applies the approval and validity rules of Sections 115VP and 115VQ to the renewed option.

Applicable law: Section 115VR is a provision of the Income-tax Act, 1961. For tax years governed by the Income-tax Act, 2025 (effective 1 April 2026), consult the corresponding provisions and transition rules in the enacted 2025 legislation. Do not assume that a 1961 Act section number continues unchanged.

What is renewal of the tonnage tax scheme?

The tonnage tax scheme is a special method of computing taxable income from operating qualifying ships, generally by reference to the ships' net tonnage rather than ordinary shipping-business profits. A qualifying company may elect the scheme subject to statutory approval and continuing conditions. Renewal is the process of obtaining a further approved option after the existing option ceases to have effect.

Section 115VR must be read with Section 115VP, which governs the method and approval of an option, and Section 115VQ, which governs its duration and cessation.

Section 115VR: Explanation of each subsection

Section 115VR(1): Time allowed for renewal

An option approved under Section 115VP(3) may be renewed within one year from the end of the previous year in which that option ceases to have effect. The provision uses the end of the relevant previous year as the reference point, not necessarily the exact calendar date on which the option ended.

A previous year under the 1961 Act ordinarily means the financial year running from 1 April to 31 March. Consequently, the applicable end date should be identified first and the one-year period calculated from that date, subject to the law governing the relevant year.

Section 115VR(2): Approval and duration rules also apply

Sections 115VP and 115VQ apply to renewal in the same manner as they apply to an initial option. Therefore, a renewal is not merely an automatic extension: the company must follow the applicable application and approval process, establish eligibility, and comply with the statutory conditions governing the option's period of operation and cessation.

Under Section 115VP, the jurisdictional Joint Commissioner may seek relevant documents, approve or refuse the application by written order, and must afford a reasonable opportunity of being heard before refusing approval. Section 115VQ governs the normal ten-year period and circumstances in which the option ceases earlier.

How is the one-year renewal period calculated?

Step	What to establish
1. Identify cessation	Determine the previous year in which the approved option ceased to have effect.
2. Find year-end	Identify the end of that previous year, normally 31 March.
3. Calculate window	Count one year from that year-end for the statutory renewal window.
4. Apply for approval	Follow the application, verification and approval provisions of Section 115VP.
5. Confirm effect	Check the approval order and the applicable rules on the commencement and duration of the renewed option.

Practical renewal checklist

Verify that the company continues to meet the conditions for a qualifying company and qualifying ships.
Review the original approval order and determine when the existing option ceases to have effect.
Calculate the statutory renewal deadline under Section 115VR(1).
Prepare the prescribed application and supporting documents under the relevant rules and instructions.
Submit the application to the competent income-tax authority and retain proof of submission.
Respond promptly to any request for information and preserve the written approval or refusal order.
Review continuing compliance obligations and circumstances that can end the option early under Section 115VQ.

Important: Section 115VR does not itself prescribe a separate form or guarantee renewal. The applicable rules, forms, statutory eligibility requirements and competent authority must be verified for the relevant period.

Illustrative renewal timeline

Suppose an approved option ceases to have effect during the previous year ending 31 March 2025. On the wording of Section 115VR(1), the one-year renewal window is measured from 31 March 2025, so the relevant deadline would ordinarily be 31 March 2026. This example explains the calculation under the 1961 Act; it does not determine the treatment of a particular application under later transitional provisions.

Frequently asked questions

Is renewal of tonnage tax automatic?

No. Section 115VR(2) applies the Section 115VP application and approval framework to renewal.

What is the renewal deadline under Section 115VR?

Within one year from the end of the previous year in which the existing approved option ceases to have effect.

Does the renewed option have the same validity rules?

Yes. Section 115VQ applies to renewal in the same manner as it applies to the initial option, including the normal ten-year duration and statutory cessation conditions.

Can a company renew after losing qualifying status?

Renewal remains subject to the applicable qualifying-company requirements and approval process. A company that no longer satisfies those requirements cannot assume that renewal will be approved.

Official legislation and further reading

This article is general legal information. For a specific renewal, verify the applicable tax year, current statutory text, prescribed procedure and any transitional provisions before filing.