Razorpay To Pay INR 1,245 Cr In Taxes For Domicile Shift To India

SUMMARY

Razorpay is also targeting an initial public offering (IPO) in the next two years

The fintech unicorn recently completed the reverse flip, merging its Delaware-registered parent entity with Indian subsidiary, Razorpay Software India Pvt Ltd, to consolidate operations in the country

The amount of tax liable for shifting a domicile from one country to another is determined by the company’s valuation. Razorpay was valued at $7.2 Bn when it last raised funding of $375 Mn in 2021

Fintech major Razorpay will likely pay approximately INR 1,245 Cr (around $150 Mn) in taxes to the Indian government as part of its reverse flip to the country, sources close to the development told Inc42.

The sources further added that the startup is also targeting an initial public offering (IPO) in the next two years.

The amount of tax liable for shifting a domicile from one country to another is determined by the company’s valuation. Razorpay was valued at $7.2 Bn when it last raised funding of $375 Mn in 2021.

Moneycontrol reported the development first.

Razorpay recently completed the reverse flip, merging its Delaware-registered parent entity with Indian subsidiary, Razorpay Software India Pvt Ltd, to consolidate operations in the country.

Back then, Shashank Kumar, cofounder and managing director at Razorpay, said, “Yes, we’ve officially completed our reverse flip, and we couldn’t be more proud.”

Last month, the Peak XV-backed unicorn converted into a public company. Back then, the company said in a regulatory filing that Razorpay got the approval of its members at an extraordinary general meeting held on March 27 to change its name to ‘Razorpay Software Limited’ from ‘Razorpay Software Private Limited’.

According to earlier estimates, the tax liability to the US government for Razorpay’s cross-border domicile shift was estimated between $250-300 Mn. But to reduce their tax liability, Razorpay’s US-registered parent entity decided to bring its six India units under a single local holding company, Razorpay Software India, as part of its restructuring exercise. This process was said to be critical to reduce the startup’s overall tax outgo and bring it down to $200 Mn.

Founded in 2014 by Kumar and Harshil Mathur, Razorpay is an omnichannel banking and digital payments platform which also forayed into SME payroll management, banking, lending, payments, insurance among others over the years.

The startup has raised over $740 Mn and counts the likes of GIC, Tiger Global,and Lightspeed Ventures among its investors.

On the financial side, Razorpay reported a consolidated net profit of INR 33.5 Cr in the fiscal year ended March 31, 2024 (FY24), a 365% jump from INR 7.2 Cr it reported in the previous year. Meanwhile, the operating revenue rose by 9% to INR 2,475 Cr for the period under review against INR 2,283 Cr in FY23.

Following the “Desh Wapsi” trend, many startups are queuing up to shift their domicile to India. These include names like Flipkart, Zepto, Pine Labs, Mensa Brands, Udaan and Eruditus.