CBDT issued Notification No. 80/2026 dated 13 July 2026, providing exemption from TDS for specified payments received by eligible units operating in an International Financial Services Centre (IFSC). The covered categories include specified interest, dividend, professional fees, commission, brokerage and certain financial-service-related income, subject to the conditions of the notification.

Why does this matter?

A payer should not automatically deduct TDS merely because the underlying payment would ordinarily attract withholding.

Where the recipient is an eligible IFSC unit and the particular payment satisfies the notified conditions, the new exemption may alter the withholding requirement.

For businesses dealing with IFSC entities, this makes vendor/customer tax master configuration particularly important. The eligibility of the recipient and nature of payment should be verified before applying the exemption.

Practical takeaway

Finance teams dealing with IFSC counterparties should review their TDS matrix and supporting documentation so that eligible transactions are treated correctly without extending the exemption to transactions that do not satisfy the notification.

Mardia Global | Tax & Business Insights for India