CBDT Notifies TDS Exemption on Aircraft Lease Rent for IFSC Units

07-Jul-2026 , 02:38:52 pm | By CASANSAAR print

CBDT Notifies TDS Exemption on Aircraft Lease Rent for IFSC Units

MINISTRY OF FINANCE
(Department of Revenue)
CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION

New Delhi, the 3rd July, 2026

S.O. 3609(E).— In exercise of the powers conferred by section 400(1) read with section 147 of the Income-tax Act, 2025 (30 of 2025) (hereinafter referred to as the said Act), the Central Government hereby specifies that no deduction of tax shall be made under section 393(1) [Table S. No. 2] of the said Act on payment in the nature of lease rent or supplemental lease rent, as the case may be, made by a person (hereafter referred to as the lessee) to a person being a Unit located in International Financial Services Centre (hereinafter referred to as the lessor) for lease of an aircraft, subject to the following conditions:

1. Conditions

(1) The lessor shall—

(a) furnish a statement-cum-declaration in Form No. 1(N) annexed to this notification to the lessee giving details of twenty consecutive tax years for which the lessor opts for claiming deduction under section 147 of the Income-tax Act, 2025; and

(b) furnish and verify the statement-cum-declaration in the prescribed manner for each tax year out of the twenty consecutive tax years for which deduction under section 147 is claimed.

(2) The lessee shall—

(a) not deduct tax on any payment made or credited to the lessor after receiving a copy of the statement-cum-declaration in Form No. 1(N); and

(b) report all such payments on which tax has not been deducted in the statement of deduction of tax referred to in section 397(3)(b) of the Income-tax Act, 2025 read with rule 219 of the Income-tax Rules, 2026.

2. Period of Relaxation

The relaxation shall be available only during the twenty consecutive tax years declared by the lessor in Form No. 1(N) for which deduction under section 147 is opted. Tax shall be deducted on lease rent relating to any other tax year.

3. Procedure

The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as applicable, shall prescribe procedures, formats, and standards for secure capture, transmission, uploading, archival, and retrieval of information and documents.

Explanation

For the purposes of this notification—

(a) "aircraft" shall have the meaning assigned in Schedule VI (Note 3) of the Income-tax Act, 2025;

(b) "International Financial Services Centre (IFSC)" shall have the meaning assigned in clause (q) of section 2 of the Special Economic Zones Act, 2005;