In this article, Ayushi Sunder discusses Legal clearances and Tax considerations to keep in mind while purchasing a yacht.


One of the most popular misconceptions related to owning a yacht is that it is a statement of ultimate luxury and is exclusive to the rich and famous. 

However, what needs to be brought into thought process is that possessing a yacht is neither impractical nor impossible. Frequently deemed as a symbol of luxury, yacht is not just about class but comes in various sizes and models suited to one’s needs and requirements. Hence, one need not be a multi-billionaire to sail on waters.


A yacht is a recreational boat, mainly used for leisure purpose. It is propelled by an engine or sails or both and is generally in the range of 40 to 100 feet, in length. The very initial step towards owning a yacht is to identify the type of yacht that one needs for there exists a vast multitude of varieties in which yachts are made available in the market.

Day sailing yacht

Also known as sailing dinghies, they are small (20ft in length) and are manufactured to suit the hourly or daily basis use and do not fit for overnight journeys.

Weekender yacht

Slightly larger in size (31ft) these boats operate in shallow waters and are streamlined to carry out journeys lasting for small durations such as 2 or 3 days. Weekenders, on a usual note, consists of a cabin with bed space.

Cruising yacht

Most commonly used, these yachts have intricate design-structures inclusive of docile handling qualities, interior space, good light-wind performance and on-board comfort. Cruisers are quite capable of taking on long-range passages of many thousands of miles and are usually preferred a family vessels.

Luxury sailing yacht

These yachts are sophisticated and luxurious boats and are highly automated with computer-controlled electric winches controlling the sails. These complex structures demand dedicated power-generation systems and often bring in comforts including- hot water, pressurised water systems, and refrigerators. With 33ft in length, assisting mechanisms such as- radar, echo-sounding and autopilot are common.

Racing yacht

Racing yachts try to reduce the wetted surface area. Modern designs tend to have a very wide beam and a flat bottom aft. Depending on the type of race, such a yacht may have a crew of 15 or more. Very large inshore racing yachts may have a crew of 30. At the other extreme are “single handed” races, where one person alone must control the yacht.


Given an extended coastline stretching over 5560 km supplemented with 11 major ports and numerous minor and intermediate ports, Shipping as a sector constitutes an imminent segment of national trade and commerce. Hence, the very commercialised and economically important character calls for certain legal sanctions that ensure proper regulation so as to effect efficient and smooth operation this domain.


This legal requirement applies to public servants and NGOs. In accordance with the Lokpal and Lokayukta Act, 2013, individuals falling under aforementioned categories lie under a duty to file their details regarding assets and liabilities. And under the Lokpal law are required to declare in case they own a yacht for the purposes of asset analysis.


The general formalities that owner of the yacht, desiring to get it registered, have to follow include:

  1. A declaration of ownership in the format of one or the other prescribed forms for declaring the possession of the yacht.
  2. A certificate that carries the signature of the manufacturers of the ship accompanied by the details of the ship including the tonnage of the ship, time and place of manufacture.
  3. Before registering the vessel, the registrar is required to obtain approval of the Director General of Shipping, who is authorised to assign unofficial number to the vessel. Please add this as a separate heading.


Approval of Director General of Shipping is subject to application. On receipt of application, DG, in his official capacity directs for an inspection of the vessel to be to be conducted.

However, prior to giving such direction for inspection, DG must satisfy himself of certificate updates and insurance guarantee by the owner. Once satisfied, DG allows survey of vessel and if fit, declares the vessel as seaworthy.


Once the registrar is satisfied that the proposed vessel possess sufficient potential to acquire recognition of an Indian ship, he then arranges for a survey of the ship in order to calculate the tonnage of the vessel for the purpose of issue of certificate of survey. This certificate is a highly document in this regard as is laid down by the following provision:

Section 220 of Merchant Shipping Act necessitates the issuance of a certificate of survey – No ship to carry passengers without a certificate of survey

  • It declares that no passenger vessel shall carry 12 passengers or more from any place/port in India to any place/port lying outside the territorial boundaries, unless a certificate of survey has been issued to such vessel applicable to the voyage on which the vessel is about to proceed.
  • In event of any ship attempting to leave port without such certificate, Customs collector or any other pilot on board are authorised to detain such vessel until a certificate of survey is issued to it.
  • After the aforementioned are completed, the Registrar issues a carving and marking note to the vessel.
  • On fulfilment of the preliminaries to registry, the Registrar finally lays down the details of the ship:
  1. Name of the ship and the port to which she belongs.
  2. Details contained in the Surveyors Certificate.
  3. Particulars respecting her origin as revealed in the declaration of ownership.
  4. The name and description of her registered owner
  5. Name of the Master, in the Registry Book. The Registrar issues thereafter to the owners a certificate of registry retaining the Surveyor’s certificate, builders certificate, instrument of sale by which the ship was sold, and the declaration of ownership.


These are issued for the purposes of regulating the entry and exit of vessels. Be it a ship or yacht, the clearance is granted only when the documents of the vessel, carrying all the details of the ship and the documents of the officers are stated correctly by the administrative authority and in charge of the vessel. Port clearances also facilitate the maintenance of records of emigration and immigration.


For conventionally-equipped and Global Safety System (GMDSS) equipped vessels, full-term licenses are granted for a term of 4 years.


It is a legalised document that takes into its ambit all sorts of damages and loss caused to the cargo during transit while insurance is implemented against an open marine policy. In some situations, the shipper may release a document which declares that shipment has been insured against a given open policy.


Ensure yourself that the purchase agreement leaves you space open to cancel the deal in the event of vessel not making up to your expectations standards. Beware of ambiguous clauses in the agreement and ask for interpretation, if needed. In case the seller warrants the repair of deficiencies, stipulate a clause regarding that in the agreement. This eliminates the possibility of seller overlooking the repairs as satisfactory.


Before purchase, it is recommended that a report submitted by surveyor is used as prime source of information to base the decision of purchase. One should avoid taking advice from yacht brokers or others who have a conflict of interest. Another important consideration is to ensure that surveyor has sufficient time to perform his job and write a report. Avoid rushing through the decision on persuasion of a broker and provide surveyor adequate time.


Appropriate parking place for yacht is important while purchasing one. A marina involves basin/dock supplemented with moors for yachts. Emplacement – Marinas may be situated near the brim of rivers connecting to larger water bodies.


Calculate the full cost of ownership, including depreciation, interest, insurance, dockage, fuel and repairs. Figure maintenance as an annual percentage over the period of ownership.


Solid homework and research is essential to acquire a clear and unambiguous understanding of available designs and their respective prices. One also needs to have a generous amount of knowledge regarding repairs and its costs. Hence, the core lies at how efficiently one can analyse and visualise the purchase in light of these facts.

Bon Voyage!


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