Business Standard

Sunday, December 22, 2024 | 02:24 PM ISTEN Hindi

Notification Icon
userprofile IconSearch

Discounting e-commerce: Taxing online discounts is illogical

The rationale is that discounts constitute marketing expenditure, incurred to build market share or a brand

Image
Premium

Business Standard Editorial Comment
The income-tax tribunal’s decision to deny domestic e-commerce player Flipkart’s appeal against the tax authorities reclassifying marketing expenditure on discounts as capital expenditure betrays a misunderstanding of the basics of business. At the centre of the dispute is the treatment of discounts. Globally, companies treat discounts as revenue expenditure, which are deducted from sales revenue before computing taxable profits. The rationale is that discounts constitute marketing expenditure, incurred to build market share or a brand. For Flipkart, the income-tax department has argued that the discounts are creating huge intangible assets for the company, and, as such, are not costs but

What you get on BS Premium?

  • Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • Pick your 5 favourite companies, get a daily email with all news updates on them.
  • Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • Preferential invites to Business Standard events.
  • Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
VIEW ALL FAQs

Need More Information - write to us at assist@bsmail.in