The CCI (Determination of Turnover or Income) Regulations, 2024

Penalties under Sections 27 and 48 are computed on turnover or income, and the amendment of 2023 redefined turnover as global turnover derived from all products and services. That definition raised a practical question the Act does not answer: what is included in turnover, what is excluded, and how is income computed for an individual. These regulations, notified in March 2024 alongside the penalty guidelines, supply the method.

1. Why They Were Needed

Before 2023 the base was contested and was settled judicially, Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47 holding that turnover meant the turnover of the product to which the contravention related. The amendment replaced that base with global turnover from all products and services, which made the computation both larger and more complex: an enterprise operating in several countries and several lines of business needed to know which receipts counted, whether intra-group sales were included, and how the figure was to be derived from accounts prepared under different standards. The regulations answer those questions.

2. What They Provide

1. The source of the figure. Turnover is taken from the audited financial statements, and where an enterprise is not required to have its accounts audited, from the statements certified in the manner prescribed. Consolidated accounts are used where the enterprise prepares them.
2. Exclusions. The regulations exclude from turnover items that do not represent receipts from the supply of goods or services, principally indirect taxes collected on behalf of the State, trade discounts, and intra-group sales, so that the same revenue is not counted twice within a group.
3. Other income. Receipts of a non-operating character are dealt with separately, so that a one-time gain on the sale of an asset does not inflate the base on which a penalty is computed.
4. Income of an individual. Where a penalty is imposed on a person under Section 48, income is computed by reference to the gross total income as disclosed in the income tax return, with the adjustments the regulations specify.
5. Foreign currency. Turnover earned abroad is converted at the rate the regulations prescribe, which matters because the global base makes exchange rates part of the calculation.
6. Best judgment. Where an enterprise fails to furnish the information, or furnishes information that is incomplete or unreliable, the Commission may determine the turnover or income on the best available material.

3. How They Work with the Penalty Guidelines

The two 2024 instruments do different things and are frequently confused. These regulations determine the base, which is the global turnover or income against which the statutory ceiling of ten per cent is applied. The Monetary Penalty Guidelines determine the penalty within that ceiling, starting from the turnover or income relating to the products or services to which the contravention relates and adjusting for the nature and gravity of the contravention, its duration, and the aggravating and mitigating circumstances. The base is therefore global and the starting point for computation is relevant, which is how proportionality survives the redefinition of turnover.

4. Related Topics and Provisions