CBDT Issues Key Income Tax Exemptions for Credit Guarantee Entities and IFSC Units



Quick Summary
The Central Board of Direct Taxes (CBDT) has announced new income tax exemptions effective from January 1, 2025. These measures include tax relief for payments made to the National Credit Guarantee Trustee Company Limited and government-managed credit guarantee funds. Additionally, there are TDS exemptions for transactions involving units in International Financial Services Centres (IFSC), simplifying compliance for businesses.

The Central Board of Direct Taxes (CBDT) has issued three significant notifications under the Income-tax Act, 1961, aimed at tax relief and compliance facilitation, effective from January 1, 2025.

Income Tax Exemptions for Credit Guarantee and IFSC Units

Key Highlights

1. Tax Exemption for Payments to National Credit Guarantee Trustee Company Limited

As per Notification S.O. 19(E), payments received by the National Credit Guarantee Trustee Company Limited, a government-established and financed entity managing credit guarantee funds, are exempt from income tax deductions under Chapter XVII. This move is expected to enhance the operations of credit guarantee schemes.

2. Exemption for Payments to Government-Managed Credit Guarantee Funds

Under Notification S.O. 20(E), payments to credit guarantee funds established and financed by the Central Government and managed by the National Credit Guarantee Trustee Company Limited will also be exempt from TDS (Tax Deducted at Source).

3. TDS Relaxation for International Financial Services Centre (IFSC) Units

Notification S.O. 21(E) introduces TDS exemptions under Section 194Q for transactions involving IFSC units, subject to specific compliance conditions. Buyers transacting with IFSC sellers will not need to deduct tax, provided the seller furnishes necessary declarations under Section 80LA of the Income-tax Act.

These measures aim to simplify tax compliance for businesses while supporting government-backed financial initiatives.

Official copy of the notification has been attached

FAQ :

The CBDT has issued notifications providing income tax exemptions for credit guarantee entities and TDS relaxations for IFSC units, effective January 1, 2025.

Payments received by the National Credit Guarantee Trustee Company Limited and payments to government-managed credit guarantee funds managed by this company are exempt from income tax deductions.

Units in International Financial Services Centres (IFSC) will have TDS exemptions under Section 194Q for certain transactions, provided the seller meets specific compliance conditions.

These exemptions and relaxations are effective from January 1, 2025.

The aim is to provide tax relief, facilitate compliance for businesses, and support government-backed financial initiatives.




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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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