The Central Board of Direct Taxes (CBDT) has issued a key update via Notification No. 6/2025 dated January 6, 2025, exempting Units of International Financial Services Centres (IFSC) from being treated as buyers under Section 206C(1H) of the Income-tax Act, 1961. This provision pertains to tax collection at source (TCS) on goods purchases.
According to the notification, IFSC Units, which are claiming deductions under Section 80LA of the Income-tax Act, are not required to be subjected to TCS on goods purchased. To qualify for this exemption, the buyer must submit a verified statement-cum-declaration in Form No. 1A, specifying the ten consecutive assessment years for which they claim deductions under Section 80LA.
Upon receipt of the form, sellers are obligated to cease collecting TCS on transactions with IFSC Units and must ensure that such exempt transactions are reported accurately in their tax collection statement. This exemption is applicable exclusively to IFSC Units claiming deductions under Section 80LA, ensuring a streamlined process for eligible entities.
The notification, effective from January 1, 2025, marks a significant step in easing the compliance burden for IFSC Units, further bolstering the operational environment within these financial hubs.
Official copy of the notification has been attached
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