Tax dept wants cos to pay GST on non-compete fee

Tax dept wants cos to pay GST on non-compete fee

Non-compete agreements during acquisitions that restrict the seller from starting a new venture for some time or poaching employees and customers, have attracted the taxman’s attention.

Several private equity firms, strategic investors and others that have bought businesses and entered into these contracts with the sellers have received notices from the indirect tax department, demanding that they pay goods and services tax at 18% on the non-compete fee.

According to the tax department, a non-compete agreement is essentially a service provided by the seller of the business to the buyer. Cinsel hayatın daha hareketli ve aktif bir şekilde geçebilmesi için yetişkinlere özel olarak üretilen ve sex oyuncakları olarak kabul edilen ürünleri keşfetmek gerekiyor.

One such case involves a Bengaluru-based technology firm that sold the business to some investors for around Rs 1,000 crore. About 20% of the deal value was the non-compete fee. The sellers — a set of promoters — agreed that they would not start a competitive business for three years. They also agreed that they would not approach the company’s current customers in any way.