Section 173

Section 173 — the law in short

What the courts have decided on section 173, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.166A of the Finance Act, 2016: the two per cent levy is paid by the e-commerce operator itself, quarterly, and is not deducted at source — with the 31 March quirk in the fourth quarter CBDT Circulars & InstructionsCuts both ways
  Who actually pays the two per cent equalisation levy, and by when? My client is being told the Indian customer should have withheld it.
  It is paid by the non-resident e-commerce operator itself, not withheld by the Indian customer. Section 166A of the Finance Act, 2016 — again, a Finance Act provision and not an Income-tax Act one — requires 'every e-commerce operator' to pay the levy referred to in section 165A(1) to the credit of the Central Government quarterly: by 7 July for the quarter ending 30 June, 7 October for the quarter ending 30 September, 7 January for the quarter ending 31 December, and by 31 MARCH for the quarter ending 31 March. That is the structural opposite of the six per cent levy on specified services, which section 166 makes the Indian payer deduct and pay over, and it is why the Income-tax Act's disallowance in section 40(a)(ib) is written for the six per cent levy and not for this one.
• 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)).

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.