The concept of TDS was introduced with the aim of collecting taxes from the source of income.
Seventeen types of payments made to seven categories of companies that work in the International Financial Services Center (IFSC) are exempt from tax deducted from Source (TDS), has said the income tax department.
The exemption applies from 1 July, said a notification by the Ministry of Finance.
“The relaxation provided in this notification is only available for the beneficiary during the aforementioned years that are relevant to the ten consecutive assessment years as indicated by the beneficiary in form No. 1, for which the 80la deduction is chosen and the payer will be liable for the payments for another year.
Exemption will be available for payments for ‘professional or consultancy or consultancy costs’ for service provider to BATF (accounting, accounting, taxes and financial crimes). In the case of real estate agent, there are no TDS applicable to payment by stock fairs committee stimuli. When a financing company receives payment for interest due to lease, freight costs or rental costs, there are no TDS.
In the case of fund management tertity, payment for professional or technical service costs, interest income and fine that are levied on the clearers of members will not attract TDs. Similar treatment will be made for professional or technical or contractual reimbursements by the recognized custodian. Similarly, a recognized grant will receive benefits from no TDs for professional or technical service costs, rent for data centers and interest income.
The report has stated any obligation as part of the beneficiary and the payer to use TDS exemption. The beneficiary is obliged to provide a statement-cum declaration in form no. 1 to the payer, and provides details for previous years that are relevant to the ten consecutive assessment years for which the beneficiary opts for claiming deduction. Accordingly, the payer will not deduct a tax on payment or credited to the beneficiary, after the date of receipt of the copy of the statement declaration in form no. 1 of the beneficiary.
The concept of TDS was introduced with the aim of collecting taxes from the source of income. According to this concept, a person (deductor) who is liable to pay a certain nature to another person (deduction), tax on the source deduction and to make it to the account of the central government. The deduction of whose income tax on the source was deducted would have the right to get the credit of the amount that is deducted in this way based on form 26AS or TDS certificate issued by the deductor.
Units that work in IFSC are considered to be exporters and rules that say that no tax should be exported, the reason could be to grant the exemption to various such companies.
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Published on June 22, 2025
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