## Policy Analysis Report: Income Tax Notification S.O. 2777(E)
**1. Executive Summary:**
This report analyzes Income Tax Notification S.O. 2777(E), issued by the Central Board of Direct Taxes on June 16, 2022. The notification addresses the non-deduction of tax on lease rent payments for aircraft, specifically between a lessee and a lessor unit located in an International Financial Services Centre (IFSC). The core purpose is to provide a tax relaxation on lease income for IFSC-based lessors. The key findings highlight the conditions required for this relaxation, primarily revolving around the lessor providing a declaration (Form No. 1) and the lessee reporting the payments.
**2. Introduction:**
This report aims to provide an informative analysis of Income Tax Notification S.O. 2777(E), based solely on the content of the provided policy text. It outlines the notification's objectives, key provisions, target audience, implementation aspects, and expected outcomes.
**3. Policy Overview:**
This is a *new* policy.
* **Core Objective(s):** The core objective, as inferred from the text, is to exempt specific lease rent payments from tax deduction at source (TDS) under Section 194I of the Income-tax Act, 1961. This exemption applies to lease rent payments made by a lessee to a lessor that is a unit located in an International Financial Services Centre (IFSC), for the lease of aircraft. The objective appears to incentivize aircraft leasing activities within IFSCs.
**4. Background and Rationale:**
As this is a new policy, the text suggests it addresses the following: The policy likely addresses a need to promote aircraft leasing within International Financial Services Centers (IFSCs) in India. By providing a tax incentive (non-deduction of tax on lease payments), the government aims to attract aircraft leasing businesses to these designated zones. It is inferable that previously, these lease payments were subject to TDS, potentially making IFSCs less attractive compared to other jurisdictions.
**5. Key Provisions / Changes:**
* **Non-Deduction of Tax:** No tax deduction is required under Section 194I on lease rent or supplemental lease rent payments for aircraft, made by a lessee to a lessor unit located in an IFSC.
* **Lessor Obligations:** The lessor *must* furnish a statement-cum-declaration in Form No. 1 to the lessee. This form provides details of the previous years relevant to the ten consecutive assessment years for which the lessor is claiming a deduction under Section 80LA of the Income-tax Act, 1961. The declaration must be furnished for each of those previous years.
* **Lessee Obligations:** The lessee is *not* required to deduct tax on payments made after receiving Form No. 1 from the lessor. However, the lessee *must* furnish particulars of all payments made without tax deduction in the statement of deduction of tax under Section 200(3) of the Income-tax Act, 1961, read with Rule 31A of the Income-tax Rules, 1962.
* **Relaxation Period:** The tax relaxation is available to the lessor during the specific previous years (up to ten consecutive assessment years) for which they have opted for deduction under Section 80LA, as declared in Form No. 1. The lessee must deduct tax on lease rent payments for any other year.
* **Form No. 1 Content:** Form No. 1 requires the lessor to provide their name, PAN, name and address of the IFSC unit, date of permission obtained under relevant laws, and a declaration that they are eligible for and have opted to claim deduction under Section 80LA.
* **Definitions:** The notification defines "aircraft," "International Financial Services Centre," and "Unit" by referencing definitions in existing legislation (Section 10 of the Income-tax Act and Section 2 of the Special Economic Zones Act, 2005).
* **Effective Date:** The notification is effective from July 1, 2022.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders are:
* **Lessees:** Companies or individuals leasing aircraft, especially from entities located in IFSCs.
* **Lessors:** Units engaged in the business of aircraft leasing located in International Financial Services Centres (IFSCs).
* **Tax Authorities:** The Central Board of Direct Taxes (CBDT) and the Income Tax Department.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) issued the notification. The Principal Director General of Income-tax Systems or the Director General of Income-tax Systems are responsible for defining procedures, formats, and standards for secure data capture and transmission.
* **Timelines/Procedures:** The key procedure is the exchange of Form No. 1 between the lessor and lessee. The lessor must furnish the form, and the lessee must retain it as proof of non-deduction of tax. The lessee also has a reporting obligation in their TDS returns.
* The notification is effective from 01.07.2022.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* **Increased Aircraft Leasing Activity in IFSCs:** The tax relaxation is expected to make IFSCs more attractive for aircraft leasing businesses, potentially leading to increased investment and economic activity in these zones.
* **Reduced Compliance Burden:** By eliminating the need for TDS on these specific lease payments (with conditions), the notification may reduce the compliance burden for both lessors and lessees.
* **Promotion of IFSCs:** This policy supports the government's broader objective of promoting IFSCs as global financial hubs.
**9. Conclusion:**
Income Tax Notification S.O. 2777(E) introduces a significant tax relaxation for aircraft leasing activities within International Financial Services Centres. By waiving TDS on lease rent payments (under specific conditions), the policy aims to incentivize investment in IFSCs and promote the growth of the aircraft leasing industry in India. The successful implementation hinges on lessors and lessees adhering to the stipulated declaration and reporting requirements.
Key Entities Referenced
New Delhi: Capital of India, place of publication of the notification.
Ministry of Finance: The Indian government ministry responsible for financial matters, issuing the notification through the Department of Revenue.
Department of Revenue: The department under the Ministry of Finance responsible for the notification.
CENTRAL BOARD OF DIRECT TAXES: An organization under the Department of Revenue issuing the notification.
Incometax Act,1961: The primary legislation governing income tax in India, cited as the legal basis for the notification (43 of 1961).
International Financial Services Center: A financial hub where units leasing aircraft can benefit from tax exemptions under specific conditions.
section 80LA: Section of the Incometax Act, 1961 related to tax deductions for units in specific economic zones.
section 194I: Section of the Incometax Act, 1961 regarding tax deduction at source (TDS) on rent payments.
Form No. 1: A statement-cum-declaration form to be furnished by the lessor (unit in IFSC) to the lessee, providing details for claiming tax deductions.
Incometax Rules, 1962: The rules framed under the Incometax Act, 1961. Rule 31A is specifically mentioned in relation to furnishing particulars of payments.
Principal Director General of Incometax Systems: An authority responsible for establishing procedures and standards for data capture, transmission, security, archival, and retrieval related to the notification.
Director General of Incometax Systems: An authority responsible for establishing procedures and standards for data capture, transmission, security, archival, and retrieval related to the notification.
Special Economic Zones Act, 2005: Act defining the meaning of 'International Financial Services Centre' and 'Unit'.
Banking Regulation Act, 1949: Act under which permission is obtained by the assessee under clause a of subsection 1 of section 23.
Securities and Exchange Board of India Act, 1992: Act under which permission or registration is obtained by the assessee.
ARVIND KUMAR MISHRA: Under Secretary who signed the notification.
Mayapuri, New Delhi: Location of the Government of India Press.
Delhi: Location of the Controller of Publications.
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
xxxGIDHxxx
सी.जी.-डी.एलxx.x-GअID.-E1x6x0x 62022-236645
CG-DL-E-16062022-236645
असाधारण
EXTRAORDINARY
भाग II—खण्ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 2644] नई ददल्ली, बहृ स्ट्प जतिार, जून 16, 2022/ज्य ष्े ठ 26, 1944
No. 2644] NEW DELHI, THURSDAY, JUNE 16, 2022/JYAISHTHA 26, 1944
जित्त म्ं ालय
(राजस्ट्ि जिभाग)
(केंद्रीय प्रत्य क्ष कर बरडड)
अजधसचू ना
नई ददल् ली, 16 जून, 2022
आयकर
का.आ. 2777(अ).—केंद्रीय सरकार, आयकर अजधजनयम, 1961 (1961 का 43) (जजसे इसमें इसके पश्चात
आयकर अजधजनयम कहा गया ह)ै की धारा 80ठक की उपधारा (2) के खंड (ग) के साथ पठठत धारा 197क की उपधारा
(1च) द्वारा प्रदत्त िजियों का प्रयरग करते हुए, जिजनर्ददष्ट करती ह ै दक एक व्यजि (जजसे इसमें इसके पश्चात पट्टेदार के रूप
में कहा गया ह)ै द्वारा यथाजस्ट्थजत, पट्टा दकराया या परू क पट्टा दकराया की प्रकृजत में दकसी व्यजि कर जर अंतराडष्ट्रीय जित्तीय
सेिा केंद्र (जजसे इसम ें इसके पश्चात पट्टा दाता कहा गया ह)ै में जस्ट्थत एक ईकाई के रूप म ें ह,ै कर जिमान पट्टे म ें देन े के जलए
दकए गए भगु तान पर जनम्नजलजखत के अधीन आयकर अजधजनयम 194झ के अधीन करई भी कर कटौती नहीं की जाएगीीः
(क) पट्टादाता जनम्न करेगा-
(i) पट्टेदार कर जपछले िर्षों का जििरण जर दस क्रमानुगत जनधाडरण िर्षों से संगत ह,ै जजसके जलए पट्टादाता
आयकर अजधजनयम की धारा 80ठक की धारा (2) के साथ पठठत उप-धारा (1क) के अधीन कटौती का
दािा का जिकल्प लते ा ह,ै प्ररूप सं. 1 में भरकर कथन सह घरर्षणा प्रस्ट्तुत करेगा; और
(ii) ऐसे कथन सह घरर्षणा, दस क्रमानुगत जनधाडरण िर्षों स े संगत प्रत्येक जिगत िर्षड के जलए जजसके जलए
पट्टादाता आयकर अजधजनयम की धारा 80ठक की धारा 2 के साथ पठठत उपधारा (1क) के अधीन कटौती
का दािा का जिकल्प लते ा ह,ै प्ररूप सं. 1 में जिजनर्ददष्ट रीजत स ेप्रस्ट्तुत एिं सत्याजपत दकया जाएगा।
4098 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(ख) पट्टेदार जनम्न करेगा-
(i) पट्टादाता से प्ररूप सं. 1 म ें कथन सह घरर्षणा की प्राप्त प्रजत के प्राजप्त तारीख के पश्चात पट्टादाता कर दकए गए
भुगतान या क्रेजडट पर करई कर कटौती नहीं करेगा; और
(ii) पट्टादाता कर दकए गए सभी भुगतानों की जिजिजष्टयां भी प्रस्ट्ततु करेगा जजसमें इस अजधसूचना के दजृष्टगत कर
कटौती के जििरण, जर आयकर अजधजनयम की धारा 200 की उपधारा (3), आयकर जनयम, 1962 के जनयम
संख्या 31क के साथ पठठत ह,ै से जनर्ददष्ट ह।ै
2. उपररि छूट पट्टादाता कर उि जपछल े दस जनधाडरण िर्षों से सगं त िर्षों के दौरान उपलब्ध हरगी जैसे पट्टादाता न े
प्ररूप स.ं 1 में घरर्षणा की ह ै जजसके जलए धारा 80ठक के अधीन कटौती का जिकल्प चुना जा रहा ह।ै पट्टेदार दकसी अन्य
िर्षड के जलए पट्टा दकराया के भुगतान पर कर कटौती के जलए उत्तरदायी हरगा।
3. प्रधान महाजनदेिक आयकर (प्रणाली) या महाजनदेिक आयकर (प्रणाली), यथाजस्ट्थजत डाटा कर सुरजक्ष त रूप से
कैप्चर करन े और प्रसाठरत करने और दस्ट्तािेजों कर अपलरड करन े कर सुजनजश्चत करन े के जलए प्रदक्रयाओं, प्रारूपों और
मानकों कर अजधकजथत करेगा और प्रधान महाजनदिे क आयकर (प्रणाली) या महाजनदेिक आयकर (प्रणाली) उपयिु
सुरक्ष ा. अजभलेखीय एिं पुनप्राडजप्त नीजतयों कर जिकजसत एिं कायाडजन्ित करन े के जलए उत्तरदायी हरगा।
स्ट्पष्टीकरणीः इस अजधसूचना के प्रयरजन के जलए –
(क) ‘जिमान’ का अथड िही हरगा जर इसे आयकर अजधजनयम की धारा 10 के खण्ड 4च के स्ट्पष्टीकरण म ें जनर्ददष्ट दकया गया
ह;ै
(ख) ‘अंतराष्ट्रड ीय जित्तीय सेिा केंद्र’ का िही अथ ड हरगा जर इसे जििेर्ष आर्थथक क्ष े् अजधजनयम, 2005 (2005 का 28) की
धारा 2 के खण्ड थ म ेंजनर्ददष्ट दकया गया ह;ै और
ग. ‘इकाई’ का अथड िही हरगा जसै ा इसे जििेर्ष आर्थथक क्ष े् अजधजनयम, 2005 (2005 का 28) की धारा 2 के खण्ड
(यग) म ेंजनर्ददष्ट दकया गया ह।ै
4. यह अजधसूचना तारीख 01.07.2022 से प्रभािी हरगी।
प्ररूप स.ं 1
अतं राष्ट्रड ीय जित्तीय सिे ा केन्द्र म ेंजस्ट्थत जिमान कर पट्टे पर दने ेके व्यापार म ेंजनयरजजत इकाई द्वारा पट्टेदार कर
प्रस्ट्ततु दकया जाना ।
1. जनधाडठरती का नाम:
2. पैन:
3. आईएफएससी में जस्ट्थत इकाई का नाम और पता:
4. बैंककग जिजनयमन अजधजनयम, 1949 (1949 का 10) की धारा 23 की उप-धारा (1) के खंड (क) के अधीन प्राप्त
अनुमजत की तारीख अथिा भारतीय सुरक्ष ा और जिजनमय बरडड अजधजनयम, 1992 (1992 का 15) के अधीन अनुमजत
अथिा रजजस्ट्री अथिा जैसा दक आयकर अजधजनयम, 1961 की धारा 80 ठक की उपधारा (1क) में उल्लेख दकया गया
ह,ै करई भी अन्य संगत जनयम:
कथन-सह-घरर्षणा
म.ैं ..................................का पु्/पु्ी...........................की क्ष मता म.ें............................., घरर्षणा
करता ह ं दक उपयुडि इकाई जिमान कर पट्टे पर देन े के व्यिसाय में जनयरजजत ह ै और आयकर अजधजनयम, 1961 की धारा
80 ठक की उपधारा (2) के साथ पठठत उपधारा (1क) के अधीन कटौती के जलए पा् ह।ै म ैं यह और घरर्षणा करता ह ं दक
हमने जपछले िर्षड ...........................................जनधारड ण िर्ष ड से संबंजधत ......................जपछले िर्षड तक
......................................जनधाडरण िर्षड से संबंजधत अिजध के जलए उि कटौती का दािा करने का जिकल्प चुना ह।ै म ैं
यह और घरर्षणा करता ह ं दक उपयुडि इकाई आईएफएससी में जनरंतर कायडरत एक इकाई के रूप म ें जनरंतर जनयरजजत ह ै
और उस .................................िर्षड (............जनधारड ण िर्षड से संबंजधत) जजसमें यह कथन-सह-घरर्षणा प्रस्ट्तुत की जा
रही ह,ै के दौरान जिमान कर पट्टे पर देन े के व्यिसाय में जनयरजजत ह।ै[भाग II—खण् ड 3(ii)] भारत का राजप् : असाधारण 3
सत्यापन
म.ैं .......................का पु्/प्ु ी ............................की क्ष मता में..................... यह प्रमाजणत करता ह ं दक उपररि
प्रस्ट्तुत सभी ब्यौरे सही और पणू ड ह।ैं
घरर्षणाकताड के हस्ट्ताक्ष र
(ऐसे व्यजि द्वारा हस्ट्ताक्ष ठरत जर आयकर अजधजनयम की धारा 140 के अनुसार आयकर जििरणी पर हस्ट्ताक्ष र के जलए
सक्ष म हर)
[अजधसूचना स.ं 65/2022 /फा. स.ं 275/30/2019-आईटी (बी)]
अरजिन्द कुमार जमश्र, अिर सजचि
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 sub-
section (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 statement-
cum-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.4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
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 Income-
tax 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.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.