Notification No. 141/2026 provides conditional relief from tax deduction at source on eligible dividend payments between aircraft-leasing units operating in International Financial Services Centres
New Delhi, November 10, 2026: The Central Board of Direct Taxes (CBDT) has notified a conditional exemption from Tax Deducted at Source (TDS) on dividend payments made between eligible International Financial Services Centre (IFSC) units primarily engaged in the business of aircraft leasing.
The exemption has been introduced through Notification No. 141/2026 dated November 4, 2026, issued by the Ministry of Finance under the Income-tax Act, 2025. The Income Tax Department published the update on its official portal on November 6, 2026.
The notification provides that eligible dividend payments between qualifying IFSC aircraft-leasing units will not be subject to TDS, provided the recipient unit furnishes the prescribed statement-cum-declaration in Form No. 1(N) to the paying unit.
The notification is deemed effective from April 1, 2026.
What Does Notification No. 141/2026 Provide?
The CBDT has exercised its powers under Section 400(1), read with Schedule VI [Table: Serial No. 11] of the Income-tax Act, 2025, to provide the specified TDS relief.
Under the notification, no tax deduction is required under Section 393(1) [Table: Serial No. 7] on dividend income paid by:
- A unit of an International Financial Services Centre primarily engaged in aircraft leasing (payer); to
- Another company that is an IFSC unit primarily engaged in aircraft leasing (payee).
The benefit is restricted to transactions satisfying the prescribed eligibility and declaration requirements.
Form No. 1(N): Mandatory Declaration by Recipient
A key requirement under the notification is the submission of Form No. 1(N) by the recipient unit to the paying unit.
The form serves as a statement-cum-declaration confirming that the recipient unit is eligible for the specified exemption.
The recipient must provide relevant information, including:
- Name of the recipient company.
- Permanent Account Number (PAN).
- Name of the IFSC unit.
- Address of the IFSC unit.
- Contact number and email address.
- Relevant tax year.
- Declaration confirming that the unit is engaged in aircraft leasing and its dividend income qualifies for exemption under Schedule VI of the Income-tax Act, 2025.
The declaration must also confirm that the unit continues to operate in an IFSC and remains engaged in aircraft leasing during the relevant tax year.
The form must be verified and signed by a person competent to sign the return of income under Section 265 of the Income-tax Act, 2025.
Responsibilities of the Paying Unit
The notification also specifies compliance responsibilities for the dividend-paying unit.
Once the payer receives a copy of the prescribed statement-cum-declaration in Form No. 1(N) from the recipient, it must:
- Stop deducting TDS on dividend payments made or credited after receiving the declaration.
- Report the particulars of all such payments on which tax has not been deducted in its applicable TDS statement.
The reporting requirement must be complied with under Section 397(3)(b) of the Income-tax Act, 2025, read with Rule 219 of the Income-tax Rules, 2026.
Therefore, the notification provides relief from deduction at source but does not eliminate the payer’s reporting obligations.
Retrospective Applicability from April 1, 2026
An important feature of Notification No. 141/2026 is its retrospective applicability.
The notification is deemed to have come into force from April 1, 2026, aligning the relief with the commencement of the Income-tax Act, 2025.
The explanatory memorandum accompanying the notification also certifies that no person is adversely affected by giving retrospective effect to the notification.
Significance for IFSC Aircraft Leasing Businesses
The notification is relevant for companies operating in the aircraft-leasing ecosystem within India’s International Financial Services Centres.
The conditional TDS relief may simplify cash-flow management and reduce the need for tax deduction and subsequent refund procedures in qualifying dividend transactions.
It also provides a prescribed declaration-based mechanism for establishing the recipient’s eligibility, while retaining reporting and verification requirements.
For finance teams, tax professionals and Chartered Accountants advising IFSC entities, the notification highlights the importance of maintaining appropriate declarations and transaction-level documentation.
What Should Companies Do?
Eligible IFSC aircraft-leasing units should review their dividend arrangements and ensure that the prescribed Form No. 1(N) is furnished to the paying entity for the relevant tax year.
Paying companies should establish appropriate internal controls to ensure that TDS is not discontinued before receipt of the required declaration and that the payments are correctly reported in their TDS statements.
Companies should also verify that they continue to satisfy the prescribed eligibility conditions throughout the relevant tax year.
Conclusion
CBDT Notification No. 141/2026 is an important direct tax development for India’s IFSC aircraft-leasing sector. By providing conditional TDS relief on qualifying dividend payments between eligible aircraft-leasing units, the government has introduced a specific compliance mechanism under the Income-tax Act, 2025.
The requirement of Form No. 1(N), together with continued reporting obligations, ensures that the relief operates within a prescribed compliance framework.
Notification Reference: Notification No. 141/2026, S.O. 6016(E), dated November 4, 2026.
Source: Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India; Income Tax Department.
Disclaimer: This article is intended for general informational purposes. Readers should refer to the original notification and applicable provisions of the Income-tax Act, 2025, before taking tax or compliance decisions.
