The notification specifies that no tax deduction shall be made under the Income-tax Act, 2025 in respect of specified payments made by any payer to a person being a Unit of an International Financial Services Centre (IFSC), as listed in the Table in the notification covering entities such as Banking Unit, IFSC Insurance Intermediary office, Finance Company, Finance Unit, Fund Management entity, Broker Dealer, Investment adviser, Registered Distributor, Custodian, Credit rating agency, Investment banker, Debenture trustee, International Trade Finance Service (ITFS), and FinTech Entity, along with the corresponding nature of receipt and relevant TDS provisions.

The notification provides definitions of the terms used, referencing corresponding International Financial Services Centres Authority (IFSCA) Regulations and Circulars for each category of Unit. It further specifies conditions: the payee shall furnish a statement-cum-declaration in Form No. 1(N) to the payer, specifying the twenty consecutive tax years for which deduction under section 147 is opted, to be furnished and verified for each such tax year; the payer shall not deduct tax on payments made after receipt of such statement-cum-declaration and shall furnish particulars of payments on which tax has not been deducted in the statement of deduction of tax under section 397(3)(b) read with rule 219 of the Income-tax Rules, 2026.

The relaxation is available only during the declared twenty consecutive tax years, and the payer remains liable to deduct tax for any other year. The Principal Director General/Director General of Income-tax (Systems) shall lay down procedures, formats, and standards for data capture, transmission, and document uploading, and shall be responsible for security, archival, and retrieval policies. The Explanatory Memorandum states that no person is being adversely affected by giving retrospective effect to this notification.