The Central Board of Direct Taxes has notified nil tax deduction at source under section 393(1) of the Income-tax Act, 2025 on certain dividends paid between IFSC units engaged in aircraft leasing. The change is set out in Notification No. 141/2026 and applies retrospectively from 1 April 2026.
Nil TDS applies where a unit of an International Financial Services Centre that is primarily engaged in aircraft leasing pays a dividend to a company that is also such an IFSC aircraft-leasing unit. The payee must furnish a statement-cum-declaration in Form No. 1(N) to the payer. The payer must report these payments in its TDS statement.
IFSC aircraft-leasing units that pay or receive such dividends should put Form No. 1(N) on file and align TDS reporting from 1 April 2026 onwards.
