Ministry of Finance 

01.08.2023

Direct Taxation

Deduction of tax under Section 194-I of Income-tax Act on payment in the nature of lease rent or supplemental lease rent made to a person being a Unit of IFSC – Reg.

MANU/CBDT/0061/2023

In exercise of the powers conferred by sub-section (1F) of section 197A read with clause (c) of sub-section (2) of section 80LA, of the Income-tax Act, 1961 (43 of 1961) (hereinafter the Income-tax Act), the Central Government hereby specifies that no deduction of tax shall be made under section 194-I of the Income-tax Act on payment in the nature of lease rent or supplemental lease rent, as the case may be, made by a person (hereinafter referred as 'lessee') to a person being a Unit of an International Financial Services Centre (hereinafter referred as 'lessor') for lease of a ship subject to the following-

(a) The lessor shall,-

(i) furnish a statement-cum-declaration in Form No.1 to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction under sub-sections (1A) and (2) of section 80LA of the Income-tax Act; and

(ii) such statement-cum-declaration shall be furnished and verified in the manner specified in Form No.1, for each previous year relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction under sub-sections (1A) and (2) of section 80LA of the Income-tax Act.

(b) The lessee shall,-

(i) not deduct tax on payment made or credited to lessor after the date of receipt of copy of statement- cum- declaration in Form No. 1 from the lessor; and

(ii) also furnish the particulars of all the payments made to lessor on which tax has not been deducted in view of this notification in the statement of deduction of tax referred to in sub-section (3) of section 200 of the Income-tax Act read with rule 31A of the Income-tax Rules, 1962.

2. The above relaxation shall be available to the lessor only during the said previous years relevant to the ten consecutive assessment years as declared by the lessor in Form No. 1 for which deduction under section 80LA is being opted. The lessee shall be liable to deduct tax on payment of lease rent for any other year.

3. 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 the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies.

Explanation: for the purpose of this notification-

(a) 'ship' shall have the same meaning as assigned to it in clause (ii) of Explanation to clause (4F) of section 10 of the Income-tax 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 (zc) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).

4. This notification shall come into force from 1st day of September, 2023.

Tags : Deduction Tax Lease rent

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