Is an extension bundle name starting with "com.extension" not possible?

Is an extension bundle name starting with "com.extension" not possible? Because I can't compile an extension with that name.
error: package com.extension.LabelPlus clashes with class of same name

you did not mention how/where you compiled your extension.
I think you can use any package name.

It compiles in the latest extension-template. I found a solution. I noticed that if the path to the code file is the same as the package name, the extension doesn't compile. Eg: \com\extension\ and package com.extension.LabelPlus does not compile. If I change the source path to eg \pl\extension\ and the package com.extension.LabelPlus then it compiles...I think the correct path should be \com\extension\LabelPlus\

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Here the package name should be com.extension
If you are placing Java file inside folders then the package of extension should be parent folder path.
You can remove the error by placing Java file directly into src folder .

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Previously, I thought these folders were important and required. But I see they don't affect the package name.