Exemption to capital gains and dividend for ship leasing units in IFSC

The Finance Bill, 2025, proposes several key changes in the Income Tax Act, 1961, to continue reforms in the direct tax system through tax reliefs, removing difficulties faced by taxpayers, and rationalizing¹ various provisions. Here are some of the key changes:

IV. Exemption to capital gains and dividend for ship leasing units in IFSC
Clause (4H) of section 10 provides exemption to non-residents or unit of IFSC engaged in aircraft
leasing on capital gains tax on transfer of equity shares of domestic companies being units of IFSC,
engaged in aircraft leasing. Further, clause (34B) of section 10 provides exemption to dividend paid by
a company being a unit of IFSC engaged in aircraft leasing, to a unit of IFSC engaged in aircraft
leasing.

2. It has been represented that similar to aircraft leasing business, in the ship leasing business,
separate special purpose vehicles (SPVs) are created for one or more vessels to safeguard the investors.
Therefore, on the lines of aircraft leasing, it is proposed to extend the exemption in,–
(I) Clause (4H) of section 10 to non-residents or units of IFSC engaged in ship leasing on capital
gains tax on transfer of equity shares of domestic companies being units of IFSC, engaged in
ship leasing.
(II) Clause (34B) of section 10 to dividend paid by a company being a unit of IFSC engaged in ship
leasing, to a unit of IFSC engaged in ship leasing.
3. These amendments will take effect from the 1st day of April, 2025