CBDT Notifies Amendment on Section 80LA of Income Tax Act, 1961 [Read Notification]

The Central Board of Direct Taxes (CBDT) has notified an amendment to section 80 LA of the Income Tax Act, 1961.

 In the 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), the Central Government specified that no deduction of tax shall be made under section 194-I of the Income-tax Act on payment like lease rent or supplemental lease rent, as the case may be, made by a person ( ‘lessee’) to a person being a Unit of an International Financial Services Centre ( ‘lessor’) for the 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 the lessor after the date of receipt of a copy of statement- cum declaration in Form No. 1 from the lessor; and

(ii) also furnish the particulars of all the payments made to the lessor on which tax has not been deducted given this notification in the statement of deduction of tax referred to in subsection (3) of section 200 of the Income-tax Act read with rule 31A of the Income-tax Rules, 1962.

It was notified that 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.

The notification further stated that 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.

 As an explanation to the notification, it was mentioned that (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).

The notification shall come into force from the 1st day of September 2023.

To Read the full text of the Order CLICK HERE

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Notification No: 57 /2023 , 1st August, 2023