CBDT Exempts IFSC’s Unit From TDS Deduction On Ships Leasing Income

The Central Board of Direct Taxes (CBIC) has exempted the unit of the International Financial Services Centre (IFSC) from TDS Deduction on ship leasing income.

"Central Government hereby specifies that no deduction of tax shall be made under Section 194-I of the Income-tax Act on payment in the nature of lease rent or supplemental lease rent, as the case may be, made by a person (lessee) to a person being a Unit of an International Financial Services Centre (lessor) for the lease of a ship," the notification read.

The exemption shall be subject to the fulfilment of various conditions.

For availing of the exemption, the lessor shall furnish a statement-cum-declaration to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts to claim deduction under sub-sections (1A) and (2) of Section 80LA of the Income-tax Act. The statement-cum-declaration shall be furnished and verified for each previous year relevant to the ten consecutive assessment years for which the lessor opts to claim deduction under sub-sections (1A) and (2) of Section 80LA of the Income-tax Act.

For the purpose of availing of the exemption, the lessee shall not deduct tax on payments made or credited to the lessor after the date of receipt of a copy of the cum- declaration in Form No. 1 from the lessor. The lessee shall also furnish the particulars of all the payments made to the lessor on which tax has not been deducted in view of this notification in the statement of deduction of tax.

The relaxation shall be available to the lessor only during the previous years relevant to the ten consecutive assessment years as declared by the lessor in Form No. 1 for which deduction under Section 80LA is being opted for. The lessee shall be liable to deduct tax on the payment of lease rent for any other year.

Notification No. 57 /2023

Date: 01/08/2023

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