Central Board of Direct Taxes (CBDT) issued notification no. 74/2026 dated 03.07.2026 vide which the Central Government hereby specifies that no deduction of tax shall be made under section 393(1)[Table S.No. 2] of the said Act on payment in the nature of lease rent or supplemental lease rent, as the case may be, made by a person (hereafter referred to as the lessee) to a person being a Unit located in International Financial Services Centre (hereinafter referred to as the lessor) for lease of an aircraft subject to the following, namely:
(1) The lessor shall –
(a) furnish a statement-cum-declaration in Form No. 1(N) annexed to this notification (hereinafter referred to as the said form) to the lessee giving details of twenty consecutive tax years for which the lessor opts for claiming deduction under section 147 of the said Act; and
(b) such statement-cum-declaration shall be furnished and verified in the manner specified in the said Form, for each tax year out of twenty consecutive tax years for which the lessor opts for claiming deduction under section 147 of the said Act;
(2) The lessee shall —
(a) not deduct tax on payment made or credited to lessor after the date of receipt of copy of statement-cum-declaration in the said Form from the lessor; and
(b) 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 of section 397(3)(b) of the said Act read with rule 219 of the Income-tax Rules, 2026.
2. The above relaxation shall be available to the lessor during the said twenty consecutive tax years as declared by the lessor in the said Form, for which deduction under section 147 is being opted and 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 they shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies.
Explanation.− For the purposes of this notification,—
a. “aircraft” shall have the same meaning as assigned to it in Schedule VI (Note 3) of the said 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 section 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005).
4. This notification shall be deemed to have come into force on the 1st day of April, 2026.
FORM No. 1(N)
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