My client paid equalisation levy on the same receipts the Assessing Officer is now taxing as income. Is there an exemption, and has the department any answer to it?
There is, and it is the only place in the Income-tax Act where the equalisation levy — which is charged by Chapter VIII of the Finance Act, 2016 and not by the Income-tax Act — meets income-tax. Section 10(50) excludes from total income any income arising from (i) a specified service provided on or after the date on which Chapter VIII of the Finance Act, 2016 came into force, or (ii) e-commerce supply or services made or provided or facilitated on or after 1 April 2020 BUT BEFORE 1 AUGUST 2024, and chargeable to equalisation levy under that Chapter. Two limits close it. Explanation 1 says the income referred to in the clause 'shall not include and shall be deemed never to have been included' any income chargeable to tax as royalty or fees for technical services in India under the Act read with a section 90 or 90A agreement. And the proviso says the clause does not apply to any income of the previous year relevant to the assessment year beginning on or after 1 April 2026 — that is, from AY 2026-27 onwards.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text), reported as Section 10(50) of the Income-tax Act, 1961, reproduced by the Income Tax Appellate Tribunal, Mumbai, at paragraph 53 of its order dated 30 December 2025 in ITA No. 2035/Mum/2025, and re-read on an independent fragment query against the same document; the clause as it stood after the Finance Act 2021 also reproduced by the Delhi High Court at paragraph 4 of its judgment dated 22 December 2021 in W.P.(C) 14714/2021. It bears on section 10(50), section 90, section 90A, section 9(1)(vi), section 9(1)(vii), section 195, section 197, section 163(3), section 165, section 165A of the Income Tax Act 1961, in Capital Gains Exemptions and How Tax Law Is Read matters.
This is the provision that decides the double-charge argument, and it decides it in a particular order. The exemption is not lost because the department calls the receipt royalty or fees for technical services; it is lost only if the receipt IS royalty or fees for technical services under the Act read with the applicable treaty. So the correct sequence is: characterise the receipt first, and reach section 10(50) second. If the receipt is not royalty or FTS, Explanation 1 never engages and the exemption stands, subject only to proof that the levy was actually paid. That is precisely how the ITAT Mumbai decided Acronis Asia Pte Ltd on 30 December 2025. Explanation 1 is also retrospective in its own words — 'shall be deemed never to have been included' — so a taxpayer cannot rely on the pre-2021 wording of the clause for an earlier year if the receipt was in truth royalty or FTS. The mirror of Explanation 1 sits on the other side of the join: the Finance Act 2021 inserted into section 163(3) of the Finance Act 2016, with retrospective effect from 1 April 2020, a proviso that consideration 'taxable as royalty or fees for technical services in India under the Income-tax Act, read with the agreement notified by the Central Government under section 90 or section 90A' is not consideration for specified services or e-commerce supply or services at all. Between the two provisions Parliament has tried to make the two charges mutually exclusive rather than cumulative. Finally, the dates: sub-clause (ii) stops at 1 August 2024 because that is when the two per cent levy stopped, and the proviso stops the whole clause at AY 2026-27 because the six per cent levy stopped for consideration received or receivable on or after 1 April 2025, which is the start of the previous year relevant to AY 2026-27. There is nothing left to exempt after that.
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Not a judgment. Section 10(50), as reproduced by the ITAT Mumbai at paragraph 53 of its order of 30 December 2025, reads: '(50) any income arising from any- (i) specified service provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016 (28 of 2016) comes into force; or (ii) e-commerce supply or services made or provided or facilitated on or after the 1st day of April, 2020 but before the 1st day of August, 2024, and chargeable to equalisation levy under that Chapter Provided that the provisions of this clause shall not apply to any income of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2026. Explanation 1. For the removal of doubts it is hereby clarified that the income referred to in this clause shall not include and shall be deemed never to have been included any income which is chargeable to tax as royalty or fees for technical services in India under this Act read with the agreement notified by the Central Government under section 90 or section 90A.' The mirror provision on the Finance Act 2016 side is the proviso to section 163(3), inserted by section 171(a)(i) of the Finance Act 2021 and deemed inserted with effect from 1 April 2020: 'Provided that the consideration received or receivable for specified services and for e-commerce supply or services shall not include the consideration, which are taxable as royalty or fees for technical services in India under the Income-tax Act, read with the agreement notified by the Central Government under section 90 or section 90A of the said Act.'
Not a judgment. The statutory position is that section 10(50) exempts from total income any income arising from a specified service provided on or after the commencement of Chapter VIII of the Finance Act 2016, and any income arising from e-commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024, in each case where the income is chargeable to equalisation levy under that Chapter; that Explanation 1 takes out of the exemption, with retrospective effect in its own words, any income chargeable as royalty or fees for technical services under the Act read with a section 90 or 90A agreement; and that the proviso disapplies the clause altogether for the previous year relevant to assessment year 2026-27 and later years.
Not a judgment; no judicial reasoning is stated for the clause itself. On how it operates, the ITAT Mumbai recorded at paragraph 54 of the Acronis order that 'Section 10(50) of the Act provides that any income arising from e-commerce supply or services, which is chargeable to Equalization Levy, shall not be included in the total income. The proviso and Explanation to the section clarify that such exclusion shall not apply only where the income is chargeable to tax as royalty or fees for technical services under the Act read with the applicable DTAA.'
Provided that the provisions of this clause shall not apply to any income of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2026.
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Handle my notice → Ask a CA on WhatsAppThere is, and it is the only place in the Income-tax Act where the equalisation levy — which is charged by Chapter VIII of the Finance Act, 2016 and not by the Income-tax Act — meets income-tax. Section 10(50) excludes from total income any income arising from (i) a specified service provided on or after the date on which Chapter VIII of the Finance Act, 2016 came into force, or (ii) e-commerce supply or services made or provided or facilitated on or after 1 April 2020 BUT BEFORE 1 AUGUST 2024, and chargeable to equalisation levy under that Chapter. Two limits close it. Explanation 1 says the income referred to in the clause 'shall not include and shall be deemed never to have been included' any income chargeable to tax as royalty or fees for technical services in India under the Act read with a section 90 or 90A agreement. And the proviso says the clause does not apply to any income of the previous year relevant to the assessment year beginning on or after 1 April 2026 — that is, from AY 2026-27 onwards. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 10(50), section 90, section 90A, section 9(1)(vi), section 9(1)(vii), section 195, section 197, section 163(3), section 165, section 165A of the Income Tax Act 1961. It is reported as Section 10(50) of the Income-tax Act, 1961, reproduced by the Income Tax Appellate Tribunal, Mumbai, at paragraph 53 of its order dated 30 December 2025 in ITA No. 2035/Mum/2025, and re-read on an independent fragment query against the same document; the clause as it stood after the Finance Act 2021 also reproduced by the Delhi High Court at paragraph 4 of its judgment dated 22 December 2021 in W.P.(C) 14714/2021. This is the provision that decides the double-charge argument, and it decides it in a particular order. The exemption is not lost because the department calls the receipt royalty or fees for technical services; it is lost only if the receipt IS royalty or fees for technical services under the Act read with the applicable treaty. So the correct sequence is: characterise the receipt first, and reach section 10(50) second. If the receipt is not royalty or FTS, Explanation 1 never engages and the exemption stands, subject only to proof that the levy was actually paid. That is precisely how the ITAT Mumbai decided Acronis Asia Pte Ltd on 30 December 2025. Explanation 1 is also retrospective in its own words — 'shall be deemed never to have been included' — so a taxpayer cannot rely on the pre-2021 wording of the clause for an earlier year if the receipt was in truth royalty or FTS. The mirror of Explanation 1 sits on the other side of the join: the Finance Act 2021 inserted into section 163(3) of the Finance Act 2016, with retrospective effect from 1 April 2020, a proviso that consideration 'taxable as royalty or fees for technical services in India under the Income-tax Act, read with the agreement notified by the Central Government under section 90 or section 90A' is not consideration for specified services or e-commerce supply or services at all. Between the two provisions Parliament has tried to make the two charges mutually exclusive rather than cumulative. Finally, the dates: sub-clause (ii) stops at 1 August 2024 because that is when the two per cent levy stopped, and the proviso stops the whole clause at AY 2026-27 because the six per cent levy stopped for consideration received or receivable on or after 1 April 2025, which is the start of the previous year relevant to AY 2026-27. There is nothing left to exempt after that. If it applies to you, the first step is this: Argue characterisation first and section 10(50) second. Establish that the receipt is not royalty or fees for technical services under the Act read with the treaty; only then does Explanation 1 fall away and the exemption operate.
Not a judgment. Section 10(50), as reproduced by the ITAT Mumbai at paragraph 53 of its order of 30 December 2025, reads: '(50) any income arising from any- (i) specified service provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016 (28 of 2016) comes into force; or (ii) e-commerce supply or services made or provided or facilitated on or after the 1st day of April, 2020 but before the 1st day of August, 2024, and chargeable to equalisation levy under that Chapter Provided that the provisions of this clause shall not apply to any income of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2026. Explanation 1. For the removal of doubts it is hereby clarified that the income referred to in this clause shall not include and shall be deemed never to have been included any income which is chargeable to tax as royalty or fees for technical services in India under this Act read with the agreement notified by the Central Government under section 90 or section 90A.' The mirror provision on the Finance Act 2016 side is the proviso to section 163(3), inserted by section 171(a)(i) of the Finance Act 2021 and deemed inserted with effect from 1 April 2020: 'Provided that the consideration received or receivable for specified services and for e-commerce supply or services shall not include the consideration, which are taxable as royalty or fees for technical services in India under the Income-tax Act, read with the agreement notified by the Central Government under section 90 or section 90A of the said Act.' It was decided by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that section 10(50) exempts from total income any income arising from a specified service provided on or after the commencement of Chapter VIII of the Finance Act 2016, and any income arising from e-commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024, in each case where the income is chargeable to equalisation levy under that Chapter; that Explanation 1 takes out of the exemption, with retrospective effect in its own words, any income chargeable as royalty or fees for technical services under the Act read with a section 90 or 90A agreement; and that the proviso disapplies the clause altogether for the previous year relevant to assessment year 2026-27 and later years.
Not a judgment; no judicial reasoning is stated for the clause itself. On how it operates, the ITAT Mumbai recorded at paragraph 54 of the Acronis order that 'Section 10(50) of the Act provides that any income arising from e-commerce supply or services, which is chargeable to Equalization Levy, shall not be included in the total income. The proviso and Explanation to the section clarify that such exclusion shall not apply only where the income is chargeable to tax as royalty or fees for technical services under the Act read with the applicable DTAA.' In the words reproduced by the source cited on this page: "Provided that the provisions of this clause shall not apply to any income of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2026."
It was decided by the CBDT Circulars & Instructions and is reported as Section 10(50) of the Income-tax Act, 1961, reproduced by the Income Tax Appellate Tribunal, Mumbai, at paragraph 53 of its order dated 30 December 2025 in ITA No. 2035/Mum/2025, and re-read on an independent fragment query against the same document; the clause as it stood after the Finance Act 2021 also reproduced by the Delhi High Court at paragraph 4 of its judgment dated 22 December 2021 in W.P.(C) 14714/2021. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 10(50), section 90, section 90A, section 9(1)(vi), section 9(1)(vii), section 195, section 197, section 163(3), section 165, section 165A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that section 10(50) exempts from total income any income arising from a specified service provided on or after the commencement of Chapter VIII of the Finance Act 2016, and any income arising from e-commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024, in each case where the income is chargeable to equalisation levy under that Chapter; that Explanation 1 takes out of the exemption, with retrospective effect in its own words, any income chargeable as royalty or fees for technical services under the Act read with a section 90 or 90A agreement; and that the proviso disapplies the clause altogether for the previous year relevant to assessment year 2026-27 and later years. It arises in Capital Gains Exemptions and How Tax Law Is Read matters, on section 10(50), section 90, section 90A, section 9(1)(vi), section 9(1)(vii), section 195, section 197, section 163(3), section 165, section 165A of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the proof of levy on the record early — Form 1 and the challans. The exemption is 'subject to verification of payment of Equalization Levy', and in Acronis Asia Pte Ltd both the Assessing Officer and the Dispute Resolution Panel refused it in part on the footing that proof of payment had not been furnished. In Coursera Inc the challans had been filed and the officer's own order said so, which is why the argument there was about characterisation and reasons rather than about proof. Check the dates in the client's own facts against sub-clause (ii): e-commerce supply or services made, provided or facilitated on or after 1 August 2024 are outside the exemption, because they were outside the levy. For any assessment year 2026-27 or later, do not plead section 10(50) at all — the proviso disapplies the clause for those years. Where the department asserts that part of the receipt is royalty or FTS and part is not, insist on an apportionment rather than an all-or-nothing denial: that is how the Delhi High Court framed the exercise in Coursera Inc when it sent a section 197 order back for a de novo decision.
Still good law. The clause is on the statute book and governs every assessment year up to and including AY 2025-26; from AY 2026-27 the proviso disapplies it. The text is taken from an order of 30 December 2025 and was confirmed by a second, independently routed retrieval of the same document; the first sub-clause and the opening of Explanation 1 were separately confirmed against a Delhi High Court judgment of 22 December 2021. That is corroboration of the TEXT. It is not a commencement history: I could not establish from a government source the Finance Act and date for the insertion of the clause, of Explanation 1, of the words 'but before the 1st day of August, 2024' or of the proviso, and this entry does not state them. I did not check whether any court has construed the proviso. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 10(50) IS an Income-tax Act provision, but the levy it refers to is not: the levy is charged by Chapter VIII of the Finance Act, 2016. The departmental route to this clause failed. incometaxindia.gov.in/w/section-10 returns SECTION 10 OF THE BHARATIYA NAGARIK SURAKSHA SANHITA, 2023 ('Chief Judicial Magistrate and Additional Chief Judicial Magistrate, etc', Year: 2023) — a wrong-instrument page not previously recorded by this project — and incometaxindia.gov.in/w/section-10-64, which is genuinely the Income-tax Act's section 10 (Year: 2024 (No. 2)), truncates in sub-clause (vi) of clause (23C) and never reaches clause (50). The text set out here is therefore taken from a Tribunal order that reproduces the clause — the ITAT Mumbai in Acronis Asia Pte Ltd v. DCIT, 30 December 2025, at its paragraph 53 — and was re-read through an independent fragment query on the same document, which returned the same words. That transcription prints the two sub-clause labels as '(1)' and '(i)' where the statute has '(i)' and '(ii)'; I have used the statute's numbering and flagged the difference rather than reproduce an obvious mis-set. The Delhi High Court in Coursera Inc (22 December 2021) sets out the clause as it stood after the Finance Act 2021 and its version agrees with this one for sub-clause (i) and for the opening of Explanation 1, which it truncates with an ellipsis. The words 'but before the 1st day of August, 2024' come from section 4(e) of the Finance (No. 2) Act, 2024 (Act 15 of 2024, assented to on 16 August 2024), which amends section 10 of the Income-tax Act: it substituted the portion of clause (50) beginning with the words 'any income arising from' and ending with the words 'under that Chapter.', and provided that the substitution 'shall be deemed to have been substituted with effect from the 1st day of August, 2024'. That provision was read on the Gazette of India text of the Act at egazette.gov.in/WriteReadData/2024/256436.pdf, and the sub-clause labels it prints are (i) and (ii), which confirms that the '(1)' and '(i)' in the Acronis transcription are a mis-set. I could NOT establish from a government source which Finance Act inserted clause (50), which inserted Explanation 1, or which added the proviso disapplying the clause from assessment year 2026-27, and `decided_on` is therefore null. The Coursera order states that the Explanation was inserted by the Finance Act 2021 with effect from 1 April 2021; that is the High Court's statement and I have not verified it against the Finance Act 2021 itself, although section 171(a)(i) of that Act does insert the mirror-image proviso into section 163(3) of the Finance Act 2016 with retrospective effect from 1 April 2020. Neither source I read carried an Explanation 2 to clause (50), and I cannot say whether one exists. The proviso to section 163(3) is quoted here in corrected form: the indiankanoon transcription of section 171(a)(i) of the Finance Act 2021 prints 'fore-commerce.supply' where this entry prints 'for e-commerce supply'. That is a transcription corruption of the kind that appears elsewhere in the same document, and the correction is mine, not the source's. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that section 10(50) exempts from total income any income arising from a specified service provided on or after the commencement of Chapter VIII of the Finance Act 2016, and any income arising from e-commerce supply or services made, provided or facilitated on or after 1 April 2020 but before 1 August 2024, in each case where the income is chargeable to equalisation levy under that Chapter; that Explanation 1 takes out of the exemption, with retrospective effect in its own words, any income chargeable as royalty or fees for technical services under the Act read with a section 90 or 90A agreement; and that the proviso disapplies the clause altogether for the previous year relevant to assessment year 2026-27 and later years.
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