Quick Summary
The Central Board of Direct Taxes (CBDT), in a significant move aimed at strengthening India's maritime financing ecosystem and promoting the growth of ship leasing activities within International Financial Services Centres (IFSCs), has issued Notification No. 75/2026, dated 3 July 2026. The notification provides that no tax deduction at source (TDS) shall be required on lease rent or supplemental lease rent payments made by a lessee to an eligible IFSC unit engaged in the business of ship leas
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FAQ :
The CBDT has notified that no tax deduction at source (TDS) is required on lease rent or supplemental lease rent payments made by a lessee to an eligible IFSC unit engaged in ship leasing, provided certain conditions are met.
The notification is deemed to have come into effect from 1 April 2026, meaning it has retrospective applicability for the current tax framework.
The IFSC unit (lessor) must furnish a Statement-cum-Declaration in Form No. 1(N) to the lessee, detailing the twenty consecutive tax years for which they opt to claim the deduction under Section 147.
Upon receiving the declaration from the lessor, the lessee must not deduct TDS on subsequent payments and must disclose these payments in the prescribed TDS reporting statement.
The exemption is available only during the twenty consecutive tax years that the IFSC unit declares when opting for the deduction under Section 147.
Form No. 1(N) is a Statement-cum-Declaration introduced for IFSC units engaged in ship leasing. It captures essential details about the unit, the tax year, and the chosen deduction period.
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