TDS Exemption Notification Proposal for IFSC Ship Leasing Company Lease Rent Payments
Proposal for notification under section 400 of the Income tax Act 2025 providing for exemption from TDS in respect of payments of lease rents to units of ship leasing companies in IFSC
The Gazette of India
CG-DL-E-03072026-274062
EXTRAORDINARY
PART II—Section 3—Sub-section (ii)
PUBLISHED BY AUTHORITY
No. 3475] NEW DELHI, FRIDAY, JULY 3, 2026/ASHADHA 12, 1948
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 3rd July, 2026
S.O. 3610(E).— In exercise of the powers conferred by section 400(1) read with section 147 of the Incometax 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 (hereinafter referred to as the lessee) to a person
being a Unit of an International Financial Services Centre (hereinafter referred to as the lessor) for lease of a ship
subject to the following, namely:-
1. (1) The lessor shall –
(a) furnish a statement-cum-declaration in Form No. 1(N) annexed to this notification (hereinafter
referred to as the said Form) to the lessee giving details of twenty consecutive tax years for which
the lessor opts for claiming deduction under section 147 of the said Act; and
(b) such statement-cum-declaration shall be furnished and verified in the manner specified in the said
Form, for each tax year out of twenty consecutive tax years for which the lessor opts for claiming
deduction under section 147 of the said Act;
(2) The lessee shall —
(a) not deduct tax on payment made or credited to lessor after the date of receipt of copy of statementcum- declaration in the said Form from the lessor; and
(b) also furnish the particulars of all the payments made to lessor on which tax has not been deducted in
view of this notification in the statement of deduction of tax referred to in section 397(3)(b) of the
said Act read with rule 219 of the Income-tax Rules, 2026.
2. The above relaxation shall be available to the lessor only during the said twenty consecutive tax years as
declared by the lessor in the said Form for which deduction under section 147 is being opted and the lessee shall be
liable to deduct tax on payment of lease rent for any other year.
3. The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as
the case may be, shall lay down procedures, formats and standards for ensuring secure capture and transmission of
data and uploading of documents and they shall also be responsible for evolving and implementing appropriate
security, archival and retrieval policies.
Explanation. − For the purposes of this notification, −
(a) “ship” shall have the same meaning as assigned to it in Schedule VI (Note 3) of the said Act;
(b) “International Financial Services Centre” shall have the same meaning as assigned to it in clause (q) of
section 2 of the Special Economic Zones Act, 2005 (28 of 2005); and
(c) “Unit” shall have the same meaning as assigned to it in section 2(zc) of the Special Economic Zones Act,
2005 (28 of 2005).
4. This notification shall be deemed to have come into force on the 1st day of April, 2026.
I ………………(name of the declarant) having Permanent Account Number ………… in capacity as …………. of
…………..(name of the payee), do hereby declare that the above-mentioned Unit is engaged in the business of leasing
of a ship and is eligible for deduction under section 147 of the Income-tax Act, 2025 (30 of 2025).
I further declare that the above-mentioned International Financial Services Centre Unit has opted to claim the said
deduction for the period from the tax year……… to the tax year………
I further declare that the above mentioned Unit continues to be a unit working in International Financial Services
Centre and continues to be engaged in the business of ………… during the tax year ……………… in which this
statement-cum- declaration is being submitted.
Verification
I…………………. in capacity as………. of……………….. (name of the payee) do hereby certify that all the particulars
furnished above are correct and complete.
Place: Signature of the declarant
Date: Name:
Designation:
[To be signed by a person competent to sign the return of income as provided in section 265 of the Income-tax Act,
2025 (30 of 2025)].
Note:-1. The name shall be provided in full.
Note:-2. The address shall contain (i) Country/Region, (ii) Flat/Door/Building, (iii) Road/Street/
Block/Sector, (iv) PIN/ZIP Code, (v) Post Office, (vi) Area/locality, (vii) District, (viii) State
Note:-3. Some of the information in the form would be pre-filled to the extent possible.
[Notification No. 75/2026/F.No. 275/18/2026-IT(B)]
RAJENDRA KUMAR MEENA, Under Secy.
Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving
retrospective effect to this notification.
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