IFSC aircraft leasing units: Form 1(N) for dividend TDS relief

CBDT Notification 141/2026, dated 4 November 2026, specifies when dividend payments qualify for non-deduction under section 393(1), Table serial no. 7, of the Income-tax Act, 2025. The payer must be an International Financial Services Centre (IFSC) unit primarily engaged in aircraft leasing. The recipient must be a company that is also an IFSC unit primarily engaged in aircraft leasing, with dividend income eligible under Schedule VI, Table serial no. 11.

The recipient must give the payer the annexed Form 1(N) for the tax year in which the eligible dividend is payable. The declaration confirms the unit’s continuing IFSC status and aircraft leasing activity for that tax year. A person competent to sign the recipient’s income-tax return under section 265 must sign the verification.

The notification is deemed effective from 1 April 2026. The payer applies non-deduction to eligible payments or credits after receiving the declaration and reports the payments in the TDS statement under section 397(3)(b) and Rule 219. Reconcile the date the declaration was received against the dividend ledger, and review earlier deductions separately before making any reporting adjustment.