The Government of India has exempted domestic airlines from deducting Tax Deducted at Source on lease rentals paid to aircraft leasing companies in Gujarat GIFT City IFSC. The Central Board of Direct Taxes issued the policy change that took effect retroactively from 1 April 2026. Domestic carriers include Air India, IndiGo and Akasa Air in the relief measures.
Eligible lessors operate within the International Financial Services Centre and choose the concessional tax regime. Lessors furnish a Form No. 1(N) declaration that specifies twenty consecutive assessment years for tax benefits. Airlines report the transactions in their routine tax deduction statements.
The exemption eliminates the need for airlines to withhold tax on lease rent or supplemental lease rent payments. It frees cash flows and removes complex refund tracking processes. India aims to develop GIFT City as a global leasing hub.
