Reclassify discounts as capex, Income Tax Department to Flipkart

The homegrown e-commerce giant Flipkart, which currently operates Republic Day sales, has reportedly lost appeal against the income tax department on the basis of deduction of marketing expenses and deduction in December.

According to a report from The Economic Times, this ruling, which is not publicly known, is spent on marketing through deep discounts by e-teals. The players of ecommerce in the country are leasing them as marketing costs and cutting them off from the revenue, causing them to post losses and therefore are not taxable.

Two online market firms are engaged in a rigid battle to get the top position in Indian e-commerce space. Taxation is imposed on cash-burning e-teals in the country by December judgment. Online markets, which typically spend significant amount on marketing costs, are considered to be profitable soon and are therefore responsible for paying 30% of the tax.

In August last year, Flipkart and Amazon appealed against the Income Tax Ordinance of the Bangalore I-T Office. According to the I-T department, the capital expenditure should be spread over four to 10 years.

This development happened at a time when the income tax department has given many early instructions to the notice of the issue of the Angel tax issue initially.

According to the Finance Act, if a private company is big or small, it is a resident of India and the capital which is being capital is more than the investment, then the premium is taxable. Under this section 56 (2) of the IT Act (VIIB) this amount is considered as 'income from other sources' and tax is up to 30.9 percent or 34.61 percent, depending on the amount of income.

Last year, Flipkart raised about $ 2.5 billion from the SoftBank Group of Japan