Home India Ministry of Finance Proposal for notification under section 197A of the Income t...
Date: 01-Aug-2023 Category: Extra Ordinary State: Union Government Country: India

Proposal for notification under section 197A of the Income tax Act 1961 providing for exemption from TDS in respect of payments of lease rents to units of ship leasing companies in IFSC

Issued by Ministry of Finance · Department of Revenue

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Executive Summary & Key Takeaways

What it means

  • The notification specifies that no tax deduction will be made under Section 194-I of the Income-tax Act, 1961 on lease rent or supplemental lease rent payments made by a lessee to a unit in an International Financial Services Centre (IFSC) for ship leasing, subject to certain conditions.
  • The lessor (IFSC unit) must furnish a statement-cum-declaration in Form No. 1 to the lessee, providing details of the relevant previous years for which they are claiming deduction under Section 80LA of the Income-tax Act.
  • The lessee will not deduct tax on payments made after receiving Form No. 1 from the lessor but must report these payments in the statement of tax deduction as per Section 200 of the Income-tax Act and Rule 31A of the Income-tax Rules, 1962.

Key Changes

  • Exemption from tax deduction under Section 194-I on lease rent payments related to ship leasing between a lessee and a unit in an IFSC, provided the lessor opts for deduction under Section 80LA.
  • Introduction of Form No. 1, a statement-cum-declaration to be furnished by the lessor to the lessee, containing details of previous years relevant to the ten consecutive assessment years for which the lessor is claiming deduction under Section 80LA.
  • The lessee is required to furnish particulars of all payments made to the lessor without tax deduction in their tax deduction statement.
  • The exemption is available only during the previous years declared by the lessor in Form No. 1 for which deduction under Section 80LA is being availed. Tax deduction is required for any other year.
  • The notification is effective from September 1, 2023.

Impact Analysis

Impact on Lessors (IFSC Units)

  • Action Item: Prepare and furnish Form No. 1 accurately and on time to lessees. Maintain records to support claims under Section 80LA.

Impact on Lessees

  • Action Item: Establish a process for obtaining and verifying Form No. 1 from lessors. Update accounting systems to track payments made without tax deduction. Ensure accurate reporting in tax deduction statements.

Impact on Tax Authorities

  • Action Item: Develop and implement procedures for monitoring compliance with the notification. Provide guidance and clarification to taxpayers on the new requirements.

Key Entities Referenced

Income-tax Act, 1961: The primary legislation governing income tax in India. Sections 10, 80LA, 194-I, 197A and 200 are specifically referenced. International Financial Services Centre (IFSC): Defined under clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005). Unit: Defined under clause (zc) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005). Special Economic Zones Act, 2005: Act defining International Financial Services Centre and Unit. Income-tax Rules, 1962: Rules framed under the Income-tax Act, 1961. Rule 31A is specifically referenced. Banking Regulation Act, 1949: Act regulating banking companies. Section 23 is specifically referenced. Securities and Exchange Board of India Act, 1992: Act establishing the Securities and Exchange Board of India.
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रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99 सी.जी.-डी.एल.-अ.-01082023-247767 xxxGIDHxxx CG-DL-E-01082023-247767 xxxGIDExxx असाधारण EXTRAORDINARY भाग II—खण् ड 3—उप-खण्ड (ii) PART II—Section 3—Sub-section (ii) प्राजधकार स ेप्रकाजित PUBLISHED BY AUTHORITY स.ं 3301] नई दिल्ली, मगं लिार, अगस्ट्त 1, 2023/श्रािण 10, 1945 No. 3301] NEW DELHI, TUESDAY, AUGUST 1, 2023/SHRAVANA 10, 1945 जित्त मत्ालं य (रािस्ट्ि जिभाग) (केंद्रीय प्रत्यक्ष कर बोडड) अजधसचू ना नई दिल्ली, 1 अगस्ट् त, 2023 आयकर का.आ. 3451(अ)— आयकर अजधजनयम, 1961 (1961 का 43)(धसमें धसके बाि आयकर अजधजनयम) की धारा 80ठक की उप-धारा (2) के खडं (ग) के साथ पठठत धारा 197क की उप-धारा (1च) द्वारा प्रित्त िजियों का प्रयोग करत े हुए, केन्द्द्र सरकार यह जिजनर्िष्टड करती ह ै दक दकसी व्यजि द्वारा (धसमें धसके पश्चात ‘पट्टाधारी’ के रूप में संिर्भडत) अंतराष्ट्रड ीय जित्तीय सेिा केंद्र की एक धकाई (धसमें धसके पश्चात ‘पट्टाकताड’ के रूप में संिर्भडत) होने के कारण दकसी व्यजि को िहाि के पट्टे के जलए पट्टा दकराया या अनपु ूरक पट्टा दकराए की प्रकृजत के भगु तान पर, िसै ा भी मामला हो, आयकर अजधजनयम की धारा 194-झ के अंतगडत उससे जनम्नजलजखत के अध्यधीन आयकर की कोई कटौती नहीं की िाएगी- (1) पट्टाकता,ड - (i) पट्टाधारी कोप्रपत् स.ं 1 में एक जििरण णोाणा प्रस्ट्ततु करेगा दक िस जमक जनधाडरण-सह-िाड के जलए संगत जपछल े िाो का ब्यौरा िते े हुए पट्टाधारी को जिसके जलए आयकर अजधजनयम की धारा 80ठक की उप-धारा (1क) और (2) के तहत पट्टाकताड छूट के जलए िािा करता ह;ै और 4967 GI/2023 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] (ii) णसा जििरण-सह-णोाणा िस जमक जनधाडरण िाों के जलए संगत प्रत्येक पूिडिती िाड के जलए प्रपत् स.ं 1 म,ें जनधाडठरत तरीके से प्रस्ट्तुत और सत्याजपत की िाएगी जिसके जलए आयकर अजधजनयम की धारा 80ठक की उप-धारा (1क) और (2) के तहत पट्टाकताड छूट के जलए िािा करता ह।ै (ख) पट्टाधारी, - (i) पट्टाकताड से प्रपत् स.ं 1 में जििरण-सह-णोाणा की प्रजत की प्राजि की तारीख के बाि पट्टाकताड को दकए गए भगु तान या िमा पर कर नहीं काटा िाएगा; और (ii) आयकर अजधजनयम की धारा200 की उप-धारा (3) के साथ पठठत आयकर जनयमािली, 1962 के जनयम 31क म ें जनर्िष्टड कर कटौती की जििरणी म ें धस अजधसूचना के मद्देनिर पट्टाकताड को दकए गए सभी भुगतानों का जििरण भी प्रस्ट्तुत करेगा, जिस पर कर कटौती नहीं की गई ह।ै 2. उपरोि छूट पट्टाकताड को केिल प्रपत् स.ं 1 म ेंपट्टाकताड द्वारा यथा णोजात िस जमक जनधाडरण िाों के जलए संगत उि जपछल े िाों के िौरान ही उपलब्ध होगी, जिसके जलए धारा 80ठक के तहत कटौती का जिकल्प चुना िा रहा ह।ै पट्टाधारी दकसी अन्द्य िा डके जलए पट्टा दकराया के भगु तान पर कर कटौती के जलए उत्तरिायी होगा। 3. प्रधान महाजनिेिक आयकर (प्रणाली) या महाजनिेिक आयकर (प्रणाली), यथाजस्ट्थजत डाटा को सुरजक्षत रूप स े ग्रहण और प्रसाठरत और िस्ट्तािेिों को अपलोड करना सुजनजश्चत करन े के जलए प्रद याओं, प्ररूपों और मानकों को अजधकजथत करेगा और प्रधान महाजनिेिक आयकर (प्रणाली) या महाजनिेिक आयकर (प्रणाली) उपयुि सुरक्षा अजभलेखीय एिं पनु प्राडजि नीजतयों को जिकजसत एिं कायाडजन्द्ित करन े के जलए उत्तरिायी होगा। स्ट्पष्टीकरण- धस अजधसूचना के प्रयोिनाथड- (क) "िहाि" का िही अथड होगा िो आयकर अजधजनयम की धारा 10 के खडं (4च) के स्ट्पष्टीकरण के खंड (ii) म ें जिजनर्िष्टड दकया गया ह;ै (ख) "अंतराडष्ट्रीय जित्तीय सेिा केंद्र" का िही अथड होगा िो जििेा आर्थडक क्षेत् अजधजनयम, 2005 (2005 का 28) की धारा 2 के खंड (थ) में जिजनर्िष्टड दकया गया ह;ै और (ग) "धकाई" का िही अथड होगा िो जििेा आर्थडक क्षेत् अजधजनयम, 2005 (2005 का 28) की धारा 2 के खंड (यग) म ें जिजनर्िष्टड दकया गया ह।ै 4. यह अजधसूचना1 जसतंबर, 2023 से लागू होगी। प्रपत् स.ं 1 अतं राष्ट्रड ीय जित्तीय सिे ा केंद्र के दकसी िहाि को पट्टाधारी को पट्टे पर िेन ेके व्यिसाय म ेंलगी हुई दकसी धकाई द्वारा प्रस्ट्ततु दकया िाना ह।ै 1. जनधाडठरती का नाम: 2. स्ट्थायी खाता संख्या: 3. अंतराष्ट्रड ीय जित्तीय सेिा केंद्र की धकाई का नाम और पता: 4. बयिकंग जिजनयमन अजधजनयम, 1949 (1949 का 10) की धारा 23 की उप-धारा (1) के खडं (क) अथिा भारतीय प्रजतभूजत और जिजनमय बोडड अजधजनयम, 1992 (1992 का 15) के तहत अनुमजत या पंिीकरण या कोई अन्द्य सगं त कानून, िैसा दक आयकर अजधजनयम, 1961 की धारा 80ठक की उप-धारा (1क) म ें उजल्लजखत ह,ै के तहत प्राि अनुमती की तारीख। जििरण-सह-णोाणा मय ........................................ पुत्/पुत्ी..............................., ................................. की हजै सयत स े णोाणा करता/करती ह ंदक उपयुडि धकाई िहाि के पट्टे के व्यिसाय म ेंलगी हुई ह ैऔर आयकर अजधजनयम, 1961 की धारा 80ठक की उप-धारा (1क) और (2) के तहत कटौती के जलए पात् ह।ै म य यह भी णोाणा करता/करती ह ं दक हमन े जपछल े िाड............ प्रासंजगक जनधाडरण िाड ............ स े जपछले िा.ड ........... प्रासंजगक जनधाडरण िाड ............ तक की अिजध के जलए उि कटौती का िािा दकया ह।ै म य यह भी णोाणा करता/करती ह ं दक उपयिुड धकाई अंतराष्ट्रड ीय जित्तीय सेिा केंद्र म ें[भाग II—खण् ड 3(ii)] भारत का रािपत् : असाधारण 3 काम करने िाली एक धकाई बनी हुई ह ै और ..................िाड (जनधाडरण िाड .............. के जलए प्रासंजगक) के िौरान जिसम ें यह ब्यौरा-सह-णोाणा प्रस्ट्तुत की िा रही ह,ै मुख्य रूप स े िहाि को पट्टे पर िेन े के व्यिसाय म ें लगी हुई ह ै । सत्यापन मय ..................................पत्ु /पुत्ी............................., ........................... की हजै सयत स े प्रमाजणत करता/ करती ह ं दक ऊपर दिए गए सभी जििरण सही और पणू ड ह।य णोाणाकताड के हस्ट्ताक्षर (आयकर अजधजनयम की धारा 140 म ें िी गई आय जििरणी को सत्याजपत करने के जलए सक्षम व्यजि द्वारा हस्ट्ताक्षठरत दकए िाने हते ु) [अजधसूचना स.ं 57/2023/फा. स.ं 275/19/2023-आईटी(बी)] श्याम िमा,ड अिर सजचि MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi the 1st August, 2023 INCOME TAX S.O. 3451(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 (hereinafter referred as ‘lessee’) to a person being a Unit of an International Financial Services Centre (hereinafter referred as ‘lessor’) for lease of a ship 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-sections (1A) and (2) of 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-sections (1A) and (2) of 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) also 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 only 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) ‘ship’ shall have the same meaning as assigned to it in clause (ii) of 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 1st day of September, 2023. Form No. 1 To be furnished by a Unit engaged in the business of leasing of a ship of an International Financial Services Centre to the Lessee 1. Name of the assessee: 2. Permanent Account Number: 3. Name and address of the unit of International Financial Services Centre: 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 a ship and is eligible for deduction under sub-sections (1A) and 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 International Financial Services Centre and continues to be engaged in the business of ship 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. 57 /2023/F. No. 275/19/2023-IT(B)] SHYAM SHARMA, 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.

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