CBDT Notifies TDS Relief on IFSC Aircraft Lease Payments

The Central Board of Direct Taxes (CBDT), through Notification No. 74/2026 dated 3 July 2026, has specified that no tax deduction shall be made on lease rent or supplemental lease rent payments made by a lessee to a lessor that is a Unit located in an International Financial Services Centre (IFSC) for leasing of an aircraft. This relief applies under the Income-tax Act, 2025 and is linked to the deduction available under Section 147.

To claim the benefit, the IFSC lessor must submit a statement-cum-declaration in Form No. 1(N) to the lessee, declaring the twenty consecutive tax years for which deduction under Section 147 is being opted. After receiving this declaration, the lessee is not required to deduct tax on the eligible payments made to the lessor.

The lessee must report the details of such payments, on which tax has not been deducted, in the applicable statement of tax deduction as per the Income-tax Rules, 2026. The relaxation will be available only for the twenty consecutive tax years declared by the lessor. For any other year, the lessee will be required to deduct tax as applicable.

The notification also authorizes the Income-tax Systems authorities to prescribe procedures, formats, security standards, and data transmission mechanisms for implementation. The notification is deemed to have come into effect from 1 April 2026. CA Sansaar

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