The Ministry of Corporate Affairs has unveiled revisions to competition legislation, empowering the Competition Commission of India (CCI) to levy penalties based on the worldwide revenue of corporations.
This signifies that the CCI now possesses the authority to impose fines on the total income generated by a company across its entire spectrum of products and services.
Implemented as of March 6, the amendment introduces a provision for penalties based on 'global turnover' for enterprises involved in practices that distort competition. This development is anticipated to impact both foreign entities operating within India and domestic firms with international ventures.
With this modification, the CCI is empowered to impose penalties on a company's turnover stemming from its complete array of products and services, irrespective of the location of sale.
In December of the preceding year, the CCI issued preliminary regulations outlining turnover determination, inviting stakeholders to provide feedback until January 12. Reports suggest that certain factors such as indirect taxes, intra-group transactions, and discounts would be excluded from the turnover computation.
The adoption of penalties linked to 'global turnover' may pose complexities for multinational corporations conducting business across diverse jurisdictions.
These penalties extend beyond revenues generated solely from activities within India, potentially influencing a company's financial strategies abroad and leading to escalated compliance expenditures.
