LI Network
Published on: December 25, 2023 at 00:36 IST
The Competition Commission of India (CCI) has put forth a proposal suggesting that indirect taxes, trade discounts, and intra-group sales should be excluded when computing the turnover of an entity for the purpose of imposing penalties in case of rule violations.
The regulatory body has opened the floor for stakeholders to provide their comments on the proposed regulations, with the deadline set for January 12 of the upcoming year, as indicated in an official notice.
The proposed measure is designed to establish norms for the imposition of penalties on both enterprises and individuals, based on the turnover or income of such entities and individuals.
According to the CCI, turnover or income, as defined, encompasses the total value of sales, revenue, receipts, and other operating income, as per the audited financial statements maintained by the enterprise. However, the turnover or income calculation will specifically exclude indirect taxes, trade discounts, and intra-group sales, if applicable.
The recent amendment, known as the Competition (Amendment) Act, 2023, has empowered the CCI by modifying Section 27, 48, and Section 64 of the existing Act. This amendment grants the CCI the authority to formulate regulations pertaining to the imposition of penalties on enterprises and/or individuals based on their turnover or income.
Under Section 27 of the Competition Act, 2002, the CCI is authorized to levy penalties on enterprises or individuals involved in anti-competitive agreements or the abuse of a dominant position.
In cases where an enterprise is obligated to prepare a consolidated financial statement in accordance with the rules, the turnover or income shall be determined based on such audited consolidated financial statements. If audited financial statements are unavailable, the turnover should be established based on the amount certified by the statutory auditor of the firm.
For individuals, income calculation will be based on the gross total income according to the Income Tax Returns (ITRs) under the IT Act rules. Individuals not required to file an ITR must provide a certified total income, supported by an affidavit, as per the directives of the competition watchdog.
These proposed norms aim to establish a comprehensive and transparent framework for determining turnover or income for both enterprises and individuals, encompassing various scenarios and ensuring proper certification and documentation.
