Quick Summary
The Central Board of Direct Taxes (CBDT) has notified that no tax deduction at source (TDS) will be required on certain payments made to eligible IFSC units. The notification has been issued under Section 147 read with Section 400(1) of the Income Tax Act, 2025 and comes into force retrospectively from April 1, 2026. The notification, published in the Official Gazette on July 10, 2026, specifies various categories of IFSC entities and the payments that will qualify for the TDS exemption. The mo
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FAQ :
The CBDT has notified that no tax deduction at source (TDS) will be required on certain specified payments made to eligible IFSC units.
The notification has retrospective effect from April 1, 2026, although it was published on July 10, 2026.
The exemption applies to various units including Banking Units, Finance Companies, Fund Management Entities, Broker Dealers, Investment Advisers, and FinTech Entities, among others.
Eligible payments include interest income on ECBs and loans, professional and technical fees, investment advisory fees, distribution and commission income, brokerage, and dividend income received by specified IFSC entities.
No, the exemption is not automatic. The IFSC unit must furnish a Statement-cum-Declaration in Form No. 1(N) to the payer to claim the benefit.
The TDS relaxation is available for twenty consecutive tax years, chosen by the IFSC unit for claiming deduction under Section 147 of the Income Tax Act, 2025.
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