CBDT issues Notification No. 65/2022 dated 16.06.2022 in S.O. 2777(E) providing for relaxation from TDS under section 194-I of the Income Tax Act, 1961 (‘Act’) in respect of lease rentals paid to aircraft-leasing units located in IFSC claiming exemption under section 80LA of the Act. It will come into force with effect from 1st July, 2022.
Section 194-I of the Act provides for deduction of tax at the prescribed rate by any person paying rent to a resident person in respect of land, building, plant, machinery, equipment or furniture or fittings. The tax shall be deducted under this section if the rent amount paid or payable during a financial year exceeds Rs. 2,40,000.
Section 197A of the Act provides that no tax shall be deducted in certain cases in respect of payments which are otherwise subject to provisions of TDS. The provisions of non-deduction of tax after submitting Form 15G or Form 15H are contained in section 197A.
Sub-section (1F) of section 197A empowers the central government to notify persons or class of person payments to whom shall not attract TDS or deduction of tax at a lower rate.
Section 80LA(1A) of the Act provides for 100% deduction to a unit located in International Financial Services Centre (IFSC) from its income derived therefrom for any 10 assessment years out of 15 assessment years beginning with the assessment year relevant to the previous year in which the permission or registration under the International Financial Services Centres Authority Act, 2019 (50 of 2019) was obtained.
This notification providing relaxation from TDS on lease rentals paid to aircraft-leasing units located in IFSC claiming exemption under section 80LA is issued by the government by exercising the powers conferred to it by section 197A of the Act.
This notification provides that no deduction of tax shall be made under section 194-I of the Act on payment of lease rent or supplemental lease rent made by a person (‘lessee’) to a person being a Unit located in the International Financial Services Center (IFSC) for the lease of an aircraft (‘lessor’).
This relaxation from TDS under section 194-I is subject to the condition that the lessor shall furnish a statement-cum-declaration in Form No. 1 for each previous year to the lessee giving details of previous years relevant to the 10 consecutive assessment years for which the lessor opts for claiming deduction section 80LA(1A).
The lessee shall not deduct tax on payment made or credited after the date of receipt of statement-cum-declaration in Form No. 1 from the lessor and furnish the particulars of all the payments made to the lessor on which tax has not been deducted in view of furnishing of Form no. 1 in the statement of deduction of tax so furnished under section 200(3) of the Act.
This relaxation shall be available 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 not covered in Form No. 1.
The procedure for filing Form No. 1 shall be online and the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall lay down procedures, formats and standards for ensuring secure capture and transmission of data and uploading of documents and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies.
Read the full text of CBDT Notification 65/2022 dated 16.06.2022 on Providing Relaxation from TDS on Lease Rentals to aircraft-leasing units located in IFSC under section 194-I
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 16th June, 2022
INCOME TAX
S.O. 2777(E).—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 (hereafter referred as ‘lessee’) to a person being a Unit located in International Financial Services Center (hereinafter the ‘lessor’) for lease of an aircraft 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 subsection (1A) read with section (2) of the 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-section (1A) read with section (2) of the 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 statementcum- declaration in Form No. 1 from the lessor; and
(ii) 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 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) ‘aircraft’ shall have the same meaning assigned to it in the 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 01.07.2022.
Form No. 1
To be furnished by a unit engaged in the business of leasing of aircraft located in International Financial Services Centre to the Lessee
(1) Name of the assessee:
(2) PAN:
(3) Name and address of the unit located in IFSC:
(4) Date of permission obtained under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949) or permission or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or any other relevant law, as mentioned in sub-section (1A) of section 80LA of the Income tax Act, 1961:
Statement-cum-Declaration
I ...................................... son/daughter of ............................... in capacity ........................................... , do hereby declare that the above-mentioned unit is engaged in the business of leasing of aircraft and is eligible for deduction under sub-section (1A) read with sub section (2) of section 80LA of the Incometax Act, 1961. I further declare that we have opted to claim the said deduction for the period from the previous year...... relevant to assessment year.... to the previous year.... relevant to assessment year…… I further declare that the above-mentioned unit continues to be a unit working in IFSC and continues to be engaged in the business of aircraft leasing during the year… (relevant to Assessment Year . .….) in which this statement-cum- declaration is being submitted.
Verification
I………………….son/daughter of ……………..in capacity………. do hereby certify that all the particulars furnished above are correct and complete.
Signature of the declarant
(to be signed by a person competent to sign the return of income as provided in section 140 of the Income-tax Act)
[Notification No. 65/2022/F. No. 275/30/2019-IT(B)]
ARVIND KUMAR MISHRA, Under Secy.
Download CBDT Notification 65/2022 dated 16.06.2022 on Providing Relaxation from TDS on Lease Rentals to aircraft-leasing units located in IFSC under section 194-I in PDF format
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