TDS Exemption for IFSC Units Under Section 80LA Effective July 1, 2025

In a significant move to boost investment in the International Financial Services Centre (IFSC), the government has announced a TDS exemption for units operating within the IFSC. This exemption, effective from July 1, 2025, is applicable under Section 80LA of the Income Tax Act. Section 80LA already provides a 100% profit-linked deduction for IFSC units for a certain period. The new notification extends the benefits by exempting these units from the requirement to deduct Tax at Source (TDS) on certain payments. This will reduce the compliance burden for IFSC units and will improve their cash flows. The TDS exemption is another key incentive provided by the government to make the IFSC, located in GIFT City, a more attractive and competitive destination for global financial services and investment activities, placing it on par with other international financial hubs.