The Income Tax (I-T) Department has issued notices to overseas shareholders of Flipkart who sold their stakes partly or fully during the $16 Bn Walmart takeover of the homegrown ecommerce company. The notices have reportedly sought details of their holdings, the sale value, and the tax liability discharged in India.
This comes on the back of the news that the income tax (I-T) authority has issued notices to Flipkart cofounders Sachin Bansal and Binny Bansal along with 35 other stakeholders. The Walmart-Flipkart deal was announced in May 2018 and the acquisition was approved by the Competition Commission of India (CCI) in August 2018.
In May 2018, the I-T department had started its enquiry to assess the capital gains that have accrued for the stakeholders who sold their shares to Walmart. The Walmart-Flipkart deal is expected to bring over $1.3 Bn (INR 10,000 Cr) in taxes into government coffers.
The I-T department has been examining Section 9 (1) of the I-T Act, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like Singapore and Mauritius are applicable to foreign investors who sold their stakes to Walmart.
In a notice served to Walmart previously, the tax department had asked it to furnish details of 44 shareholders of Flipkart and how much each of them gained from the deal.
Due to Flipkart’s complex structure of investments and backers, the tax department has been chasing all those connected with the deal to identify the taxes they’re due to pay.
[The development was reported by ET.]