The Central Board of Direct Taxes (CBDT), on November 4, 2026, specified exemption from deduction of tax at source (TDS) under Section 393(1), Table S. No. 7 of the Income-tax Act, 2025, read with Section 400(1) and Schedule VI, Table S. No. 11, in respect of dividend income paid by an IFSC unit primarily engaged in aircraft leasing (payer) to another IFSC unit primarily engaged in aircraft leasing (payee).
To avail the exemption, the payee must furnish Form No. 1(N), containing a statement-cum-declaration confirming its eligibility and details of the relevant tax year, to the payer. Upon receipt of the declaration, the payer shall not deduct TDS on subsequent dividend payments and must report such payments in its TDS statement under Section 397(3)(b) of the Act read with Rule 219 of the Income-tax Rules, 2026. The Principal Director General/Director General of Income-tax (Systems) shall prescribe procedures, formats and standards for secure data transmission and document uploading.
The notification is deemed to have come into force from April 1, 2026. Accordingly, eligible IFSC aircraft-leasing units may claim the prescribed TDS exemption subject to furnishing and verification of Form No. 1(N) and fulfilment of the specified conditions.
[Notification S.O. 6016(E)]
