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CCI Introduces Regulations to Streamline Determination of Turnover and Income

Introduction

The Competition Commission of India (‘CCI’) has recently introduced the CCI (Determination of Turnover or Income) Regulations, 2024[i] (‘Regulations’). These regulations, coming into effect from 06.03.2024, aim to provide clarity and uniformity in determining turnover or income for enterprises and individuals under the purview of the Competition Act, 2002 (‘Act’). Understanding these regulations is crucial for businesses and individuals operating within India’s competitive landscape.

Determination of Turnover or Income for Enterprises

For enterprises, turnover or income includes sales value and other operating revenue as per audited financial statements, excluding certain components such as other income, indirect taxes, trade discounts, and intragroup sales. Where consolidated financial statements are required under the Companies Act, 2013, the turnover shall be based on such statements. In the absence of audited financials, the turnover can be certified by a statutory auditor or a Chartered Accountant, supported by an affidavit. Foreign currency turnover should be converted to Indian rupees using specified criteria.

Determination of Income for Individuals

For individuals, income is deemed as the gross total income as per the income tax returns filed under the Income-tax Act, 1961, with specific exclusions for income from house property and capital gains. In instances where tax returns are absent or filed across multiple jurisdictions, a Chartered Accountant’s certification, supplemented by an affidavit, serves as the basis for income determination. Further, individuals not required to file income tax returns shall certify their total income through a Chartered Accountant, supported by an affidavit.

Removal of Difficulties

The regulations empower the CCI to address unforeseen situations or interpretational ambiguities not explicitly covered within the regulatory framework. Decisions regarding matters not addressed in these Regulations or their interpretation shall be made by the CCI, and such decisions shall be binding. This ensures flexibility and enables the CCI to resolve emerging turnover or income determination challenges promptly.

Conclusion

The Regulations represent a significant step towards streamlining the computation of turnover or income for entities and individuals subject to the Act. By providing clear guidelines and procedures, these regulations enhance transparency, consistency, and efficiency in the enforcement of competition law in India. Adherence to these regulations is crucial for enterprises and individuals to ensure compliance with the Act and to foster a competitive business environment conducive to innovation and consumer welfare.


End Note

[i] Notification No. B-14011/2/2024-ATD-II dated 06.03.2024.


Authored by Nitish Solanki, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.

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