CBDT Notification 28/2024 Dated 8 March 2024: No TDS to be deducted from Specified payments made by any person to a Unit of International Financial Services Centre (IFSC)
In a recent development on March 8, 2024, the Central Board of Direct Taxes (CBDT) has issued Notification No. 28/2024. According to this notification, no tax deduction shall be made under the Income-tax Act for specified payments made by any payer to a Unit of International Financial Services Centre (IFSC).
This notification aligns with the provisions laid out in sub-section (1F) of section 197A, along with subsection (1A) and sub-section (2) of section 80LA of the Income-tax Act, 1961.
Effective from April 1, 2024, the notification comes with the following conditions:
Conditions for the ‘Payee’:
The ‘payee’ must:
(i) Submit a statement-cum-declaration in Form No. 1 to the ‘payer’, detailing previous years relevant to ten consecutive assessment years for which deduction under sub-sections (1A) and (2) of section 80LA of the Income-tax Act is chosen.
(ii) Furnish and verify the statement-cum-declaration in the manner prescribed in Form No. 1, for each relevant previous year within the ten consecutive assessment years.
Responsibilities of the ‘Payer’:
The ‘payer’ should:
(i) Refrain from deducting tax on payments to the ‘payee’ after receiving a copy of the statement-cum-declaration in Form No. 1.
(ii) Include details of all payments made to the ‘payee’, where tax has not been deducted due to this notification, in the tax deduction statement as per sub-section (3) of section 200 of the Income-tax Act, read with rule 31A of the Income-tax Rules, 1962.
Limitations and Yearly Scope:
The relaxation is applicable to the ‘payee’ only for the declared previous years within the ten consecutive assessment years, for which deduction under section 80LA is chosen.
The ‘payer’ remains responsible for deducting tax on payments mentioned above for any other year.
Procedures and Implementation:
The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) will establish procedures, formats, and standards for secure data capture, transmission, and document uploading.
They will also be accountable for developing and implementing security, archival, and retrieval policies.
In conclusion, this notification provides a significant relief for specified payments made to Units of International Financial Services Centres (IFSCs) by eliminating the requirement for tax deductions under the Income-tax Act.
Form No. 1
To be furnished by a Unit of International Financial Services Centre (‘payee’) to the ‘payer’
(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 or permission or registration under the Securities and Exchange Board of India Act, 1992 or permission or registration under the International Financial Services Centres Authority Act, 2019 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 ………………… and is eligible for deduction under sub-section (1A) and sub-section (2) of section 80LA of the Income-tax Act, 1961. I further declare that the above-mentioned International Financial Services Centre Unit has 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 ………… 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)
For more details about the Notification CLICK HERE
To Access the CBDT Notification 27/2024 Dated 5 March 2024 CLICK HERE
Also Read
CBDT Circular 4/2024: Extension of Due Date for Filing Form 26QE by Specified Persons
CBDT Circular 3/2024: Amendment in Treatment of Donations made by Trusts/Institutions