The notification is issued by the Central Board of Direct Taxes in exercise of powers conferred by section 400(1) read with section 147 of the Income-tax Act, 2025 (30 of 2025).

Central Government specifies that no deduction of tax shall be made under section 393(1) [Table S.No. 2] of the Income-tax Act, 2025 on payment in the nature of lease rent or supplemental lease rent made by a person (lessee) to a Unit located in an International Financial Services Centre (lessor) for lease of an aircraft, subject to conditions: the lessor shall furnish a statement-cum-declaration in Form No. 1(N) to the lessee giving details of twenty consecutive tax years for which deduction under section 147 is opted, furnished and verified for each such tax year; the lessee shall not deduct tax on payments made or credited to the lessor after receipt of the said statement-cum-declaration, and shall furnish particulars of such payments in the statement of deduction of tax under section 397(3)(b) of the Act read with rule 219 of the Income-tax Rules, 2026.

The relaxation is available to the lessor only during the twenty consecutive tax years declared in the said Form, and the lessee remains liable to deduct tax on lease rent payments for any other year. The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall lay down procedures, formats and standards for secure data capture, transmission and document upload.

Form No. 1(N) prescribes the statement-cum-declaration to be furnished by the IFSC unit to the lessee. The notification is signed by Rajendra Kumar Meena, Under Secretary, and includes an Explanatory Memorandum certifying that no person is adversely affected by the retrospective effect.