The CBDT, through Notification No. 141/2026 dated 4 November 2026, has provided a TDS exemption on dividend income paid between eligible IFSC units engaged in aircraft leasing. To claim the benefit, the recipient unit must submit Form No. 1(N) to the payer. The payer is required to report payments made without TDS in the prescribed TDS statement. The notification is effective retrospectively from 1 April 2026.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 4th November, 2026
INCOME TAX
S.O. 6016(E).— In exercise of the powers conferred by section 400(1) read with Schedule VI [Table: S.No. 11] of the Income-tax Act, 2025 (30 of 2025) (hereinafter referred to as the said Act), the Central Government hereby specifies that no deduction of tax shall be made under section 393(1)[Table: S.No. 7] of the said Act from any income in the nature of dividend paid by any unit of an International Financial Services Centre, primarily engaged in the business of leasing of an aircraft (hereinafter referred to as the payer) to a company, being a Unit of an International Financial Services Centre primarily engaged in the business of leasing of an aircraft (hereinafter referred to as the payee) subject to the following, namely:-
1. (1) The payee shall,—
(a) furnish a statement-cum-declaration in the Form No.1(N) annexed to this notification (hereinafter referred to as the said Form) to the payer giving details of the tax year in which the dividend income eligible for exemption under Schedule VI [Table: S.No. 11] of the said Act is payable; and
(b) such statement-cum-declaration shall be furnished and verified in the manner specified in the said Form for the tax year in which the dividend income eligible for exemption under Schedule VI [Table: S.No. 11] of the said Act is payable;
(2) The payer shall,—
(a) not deduct tax on payment made or credited to the recipient of such dividend (payee) after the date of receipt of copy of statement-cum-declaration in the said Form from payee; and
(b) furnish the particulars of all the payments made to the recipient of such dividend on which tax has not been deducted in view of this Notification in the statement of deduction of tax referred to in section 397(3)(b) of the said Act, read with the rule 219 of the Income-tax Rules, 2026.
2. The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall lay down procedures, formats and standards for ensuring secure capture and transmission of data and uploading of documents and they shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies.
Explanation.— For the purpose of this notification,—
(a) "aircraft" shall have the same meaning as assigned to it in Note 3 of Schedule VI to the said Act;
(b) "International Financial Services Centre" shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); and
(c) "Unit" shall have the same meaning as assigned to it in clause 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005).
3. This notification shall be deemed to have come into force on the 1st day of April, 2026.
Notification No. 141/2026/F. No. 275/17/2026-IT(B)]
RAJENDRA KUMAR MEENA, Under Secy.
Source: Gazette of India, Extraordinary, dated 4 November 2026.
Source: CA Sansaar