Quick Summary
The Central Board of Direct Taxes (CBDT), in a significant move aimed at strengthening India's aircraft leasing ecosystem within International Financial Services Centres (IFSCs), has notified that no tax will be deducted at source (TDS) on lease rent or supplemental lease rent payments made for aircraft leased from eligible IFSC units. The notification, issued by the Ministry of Finance on July 3, 2026, provides relief to lessees making payments to aircraft leasing units operating in IFSCs and
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FAQ :
The main purpose is to strengthen India's aircraft leasing ecosystem within International Financial Services Centres (IFSCs) by exempting TDS on aircraft lease rental payments made to eligible IFSC units.
Lessees making payments to aircraft leasing units operating in IFSCs will benefit from this exemption, as will the IFSC-based lessors.
The aircraft leasing unit (lessor) in an IFSC must furnish a statement-cum-declaration (Form No. 1(N)) to the lessee, specifying the twenty consecutive tax years for which they opt for the deduction under Section 147 of the Income Tax Act, 2025.
The exemption is available only during the twenty consecutive tax years declared by the lessor for claiming the deduction under Section 147.
The notification has retrospective effect and is deemed to have come into force from April 1, 2026.
This tax relief is expected to position India as a competitive global hub for aircraft leasing and aviation finance by reducing administrative burdens and improving cash flow efficiency for aviation businesses.
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