FA 2016 s.163

FA 2016 s.163 — the law in short

What the courts have decided on section FA 2016 s.163, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.165 of the Finance Act, 2016: the six per cent equalisation levy on online advertisement, the one lakh rupee threshold, the three exclusions, and the 1 April 2025 cut-off CBDT Circulars & InstructionsCuts both ways
  My client paid a foreign platform for online advertising. Was it required to withhold six per cent equalisation levy, what was the threshold below which it was not, and from when did that levy stop?
  The six per cent levy is charged by section 165 of the Finance Act, 2016 — it is not in the Income-tax Act, and a reader who looks for it there will not find it. It is charged on the amount of consideration for any specified service received or receivable by a NON-RESIDENT from (i) a person resident in India carrying on business or profession, or (ii) a non-resident having a permanent establishment in India. It is not charged in three cases: where the non-resident providing the service has a permanent establishment in India and the service is effectively connected with it; where the aggregate consideration for specified service received or receivable in a previous year by that non-resident from that payer does not exceed ONE LAKH RUPEES; and where the payment is not for the purposes of carrying on business or profession. Sub-section (3) ends the charge: it does not apply to any consideration for any specified service received or receivable by a person on or after 1 April 2025.
• 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.