Section 163(3)

Section 163(3) — the law in short

What the courts have decided on section 163(3), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.165A of the Finance Act, 2016: the two per cent levy on e-commerce supply or services, the two crore threshold, the specified circumstances, and the 1 August 2024 cut-off CBDT Circulars & InstructionsCuts both ways
  A foreign platform sold to Indian customers. Was it liable to the two per cent equalisation levy on its own receipts, what was the threshold, and when did that levy end?
  The two per cent levy is charged by section 165A of the Finance Act, 2016 — again, not by the Income-tax Act. It was inserted with effect from 1 April 2020 and charges two per cent of the consideration received or receivable by a NON-RESIDENT e-commerce operator from e-commerce supply or services made or provided or facilitated by it to a person resident in India, to a non-resident in the 'specified circumstances', or to a person who buys using an internet protocol address located in India. It is not charged where the operator has an Indian permanent establishment with which the supply is effectively connected, where the six per cent levy under section 165 is leviable, or where the operator's sales, turnover or gross receipts from e-commerce supply or services are less than TWO CRORE RUPEES during the previous year. Sub-section (4) ends the charge: it does not apply to consideration received or receivable on or after 1 AUGUST 2024.
• Statutory position — the equalisation levy is charged by Chapter VIII of the Finance Act, 2016 and not by the Income-tax Act: what the Chapter contains, when it commenced, and the two different dates on which the two levies stopped CBDT Circulars & InstructionsCuts both ways
  A notice has come in demanding equalisation levy, and I cannot find the levy anywhere in the Income-tax Act. Which statute is it actually in, what machinery governs assessment and appeal, and has it not been abolished?
  The equalisation levy is not in the Income-tax Act, 1961 at all. It is charged by Chapter VIII of the Finance Act, 2016 (Act 28 of 2016), which is a self-contained code running from section 163 to section 180 with its own extent and commencement provision, its own definitions, two charging sections, its own collection, statement, assessment, rectification, interest, penalty and appeal provisions, its own rule-making power and its own removal-of-difficulties power. Chapter VIII came into force on 1 June 2016, that date having been appointed by Notification No. S.O. 1904(E) dated 27 May 2016 issued under sub-section (2) of section 163, and the Equalisation levy Rules, 2016 were notified the same day by S.O. 1905(E) under sub-section (3) of section 179. Both levies have since been switched off, on DIFFERENT dates: the two per cent levy on e-commerce supply or services does not apply to consideration received or receivable by an e-commerce operator on or after 1 August 2024 (section 165A(4)), and the six per cent levy on specified services does not apply to consideration for specified service received or receivable on or after 1 April 2025 (section 165(3)).
• Statutory position — s.10(50) of the Income-tax Act: the exemption for income already subjected to equalisation levy, the royalty and fees-for-technical-services carve-out, and the two dates that close it CBDT Circulars & InstructionsCuts both ways
  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.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.