CBDT notifies exemption from TDS u/s 194-I on lease rent or supplemental lease rent of a ship received by a unit operating within an IFSC, vide Notification 57/2023.
CBDT Income Tax Notification 57/2023 dated 01/08/2023: TDS Exemption u/s 194-I for Lease Rent of Ships by Lessor in IFSC
This means that the lessee is not required to deduct tax on the payment made to the lessor for lease rent or supplemental lease rent of a ship subject to certain conditions.
The lessor (unit of IFSC) is required to furnish a duly verified statement-and-declaration in Form 1 to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction u/s 80LA and relaxation of TDS exemption u/s 194-I. The lessee shall be liable to deduct tax on payment of lease rent for any other year.
The lessee, on the other hand, shall not deduct tax on payment made or credited to the lessor after the date of receipt of the copy of Form 1 from the lessor. Additionally, the lessee must furnish the particulars of all the payments on which tax has not been deducted in the TDS statement.
In summary, the CBDT has exempted the tax deduction at source under section 194-I on lease rent or supplemental lease rent received by a unit operating within an International Financial Services Centre (IFSC) for the lease of a ship. However, certain conditions must be met, including the submission of Form 1 by the lessor and the non-deduction of tax by the lessee.