CBDT Notification 141/2026 outlines Form 1(N) no-TDS workflow for IFSC aircraft-leasing dividends

The Central Board of Direct Taxes (CBDT) issued Notification No. 141/2026, establishing a streamlined workflow for eligible aircraft-leasing dividends operating within International Financial Services Centres (IFSC) to receive no Tax Deducted at Source (TDS) treatment. To avail of this benefit, entities must utilize Form 1(N), supported by strict payer reporting mechanisms and compliance evidence controls. Tax Deducted at Source is a mechanism where tax is collected at the very source of income generation by the payer on behalf of the tax authority.

Exemptions or waivers from TDS in specialized zones like IFSCs are designed to encourage global leasing companies and foreign investment in the aviation sector by eliminating cash flow blockages. The requirement to file specific forms like Form 1(N) ensures that tax authorities retain oversight while granting the statutory relief. Tax professionals representing IFSC-based aircraft leasing entities must ensure timely and accurate filing of Form 1(N) before dividend distributions are executed.

Set up internal tracking systems to manage payer reporting obligations and maintain verifiable documentary evidence to substantiate the nil withholding tax position. Review Notification No. 141/2026 thoroughly to align operational compliance with the prescribed workflow. Bottom line: IFSC aircraft-leasing entities must file Form 1(N) under CBDT Notification No. 141/2026 to secure the no-TDS benefit on dividends.