Tech3 | CCI fines to cost big tech big bucks, Infosys terminates trainees again and more

One quick thing: Sedemac Mechatronics taps Axis, ICICI Securities, Avendus as bankers for IPO 

In today’s newsletter:

• Big blow for Big Tech 
• Fourth round of trainee layoffs at Infosys 
• Decoding Urban Company's DRHP

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Big blow for Big Tech 

Settling regulatory probes in India is about to get costlier for Big Tech giants!

Taxing issue: In an April 23 circular, the Central Board of Direct Taxes (CBDT) said money paid by businesses to settle contraventions of various regulations, including the Competition Act and the Securities Contracts Act, cannot be claimed as tax deductible. 

• This means the settlement amount will be added to a company’s taxable income—resulting in an effective tax hit of 25.17%

Who's affected? Big names like Amazon, Apple, Google, Flipkart, and Samsung, all currently facing CCI probes for alleged market dominance violations, will feel the heat.

“Taxpayers will not be able to reduce their tax liability by claiming tax deduction for settlement fees and charges after this change,” said Amit Maheshwari, tax partner at AKM Global.

Even listed companies looking to settle securities law violations with SEBI will face the same treatment.

• Last week, Google settled a CCI case involving alleged abuse of market dominance in the smart TV category by paying Rs 20.24 crore as the fee

Pay more to settle: SEBI whole-time member Kamlesh Varshney recently noted:

“You come for settlement, you pay more than what you end up paying for litigation.”

Legal experts, however, say more clarity is needed, especially for cases settled before the April 23 notification.

“CBDT notification under Section 37 of the Income tax Act, 1961 is helpful as it provides clarity on the deductibility of expenditure incurred in settling the defaults. However, it is not clear if such expenses incurred prior to 23 April, 2025 will be deductible or not,” said Amit Singhania, founder, Areete Law Offices.

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