The CBDT has issued Notification No. 67/2025 dated June 20, 2025, effective from July 1, 2025, exempting certain payments made by specific entities to International Financial Services Centre (IFSC) units from deduction of tax at source (TDS) under the Income-tax Act. The exempted payers include finance companies, fund management entities, recognised clearing corporations, stock exchanges, recognised depositories, and broker-dealers. Payments covered under this exemption include commission incentives, interest on leases, freight or hire charges, portfolio management fees, advisory and management fees, professional and technical service fees, rent for data centres, penalties levied by exchanges, and related payments.
The exemption applies only if the payee (IFSC unit) submits a statement-cum-declaration (Form No. 1) to the payer, detailing the consecutive ten assessment years for which the TDS exemption is claimed under section 80LA of the Income-tax Act. The payer must then refrain from deducting tax on payments made after receiving the declaration and report such payments accordingly.
This relief facilitates smoother financial operations within IFSC units by reducing tax compliance burdens and promoting international financial services in India. The exemption is strictly limited to income arising from business activities carried out by IFSC units approved in Special Economic Zones.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/06/CBDT-Notification-No.-67_2025.pdf
