CBDT Notifies TDS Exemption for Payments Made to IFSC Units

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  • Last Updated on 23 June, 2025

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TDS Exemption for IFSC Units

Notification No. 67/2025, dated 20-06-2025

The Central Board of Direct Taxes (CBDT) has notified a list of specified payments and corresponding sections of the Income-tax Act, 1961, under which no tax deduction at source (TDS) is required when such payments are made to International Financial Services Centre (IFSC) Units.

1. Objective of the Notification

This move is aimed at:

  • Promoting IFSC units as a hub for global financial services,
  • Reducing compliance burdens on payers,
  • Enhancing the ease of doing business within the IFSC ecosystem,
  • Attracting foreign capital and service providers by offering tax certainty and operational ease.

2. Categories of Payments Exempted from TDS

The following categories of payments, when made to an eligible IFSC Unit, are now exempt from TDS:

2.1 By BATF Service Providers

Professional, Consulting, or Advisory Fees paid by a BATF (Bullion Exchange Approved Trading Facility) Service Provider.

2.2 By Recognised Stock Exchanges (Broker-Dealers)

Payments made by Recognised Stock Exchanges acting as broker-dealers.

2.3 By Finance Companies

Interest payments arising from lease arrangements.

2.4 By Fund Management Entities

Payments such as:

  • Portfolio Management Fees
  • Investment Advisory Fees
  • Management Fees
  • Performance Fees

2.5 By Recognised Clearing Corporations

Payments for:

  • Professional or Technical Services
  • Interest Income
  • Penalties levied on clearing members

2.6 By Recognised Depositories

Payments towards:

  • Professional, Technical, or Contractual Services

2.7 By Recognised Stock Exchanges (in other capacities)

Payments relating to:

  • Professional or Technical Services
  • Rent for Data Centres
  • Interest Income
  • Penalties levied on members

3. Implications for Taxpayers and IFSC Units

  • Payers making the above payments to IFSC entities are not required to deduct tax at source, ensuring smoother financial operations and settlements.
  • IFSC units benefit from improved cash flow management and tax-efficient operations.
  • The move reinforces the government’s intent to provide a globally competitive tax regime for IFSC operations.

4. Conclusion

This CBDT notification marks another important reform toward making GIFT IFSC and other notified centres globally attractive destinations for financial, advisory, and trading services by offering regulatory clarity and fiscal incentives.

Click Here To Read The Full Notification

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied