India Tax & Regulatory
Non-Compete Fee Taxation (Section 28(va))
Consideration paid specifically for a non-compete undertaking is taxable as "profits and gains of business" under Section 28(va), distinct from capital gains treatment on the business sale itself.
Buyer Example
Buyer acquiring a Jodhpur handicraft export business allocates ₹2 Cr of the total ₹25 Cr consideration specifically as a non-compete fee, structured to be taxed under Section 28(va) as business income for the seller. Buyer's counsel confirms the allocation is defensible and not recharacterizable as disguised capital gains, protecting the deal structure from later challenge.