The Central Board of Direct Taxes (CBDT) has introduced a new tax exemption allowing certain dividend payments between aircraft leasing units operating in India’s International Financial Services Centre (IFSC) to be made without Tax Deducted at Source (TDS).
The exemption applies when one eligible IFSC aircraft leasing unit pays dividend income to another eligible unit, subject to the prescribed documentation requirements.
New Notification Under Income-tax Act 2025
The exemption has been introduced through Notification No. 141/2026. It provides that tax will not be deducted on qualifying dividend payments between these specified units.
Form 1(N) Is Mandatory
To claim the benefit, the receiving IFSC unit must furnish the prescribed Form 1(N). The exemption is therefore subject to compliance with the conditions specified in the notification.
Effective Date of the Exemption
The new provision takes effect retrospectively from April 1, 2026. It is expected to simplify tax compliance for eligible aircraft leasing businesses operating within the IFSC framework.
The notification is part of the government’s efforts to strengthen India’s international financial services ecosystem and support specialised financial activities.
