Flipkart deal: I-T department asks Walmart to explain tax break up of Rs 7,439 crore

NEW DELHI: Not satisfied with the Rs 7,439.40 crore withholding tax deposited with the federal government, the income tax department has written to Walmart International Holdings, the buyer of majority shareholders of Flipkart Singapore, to explain the break-up of how much tax has been deducted from fee to each shareholder.

Walmart, which is yet to supply details, has been given time until September 17 to furnish the break-up. SoftBank and eBay, main shareholders in Flipkart, should pay 40 per cent and 20 per cent capital beneficial properties tax, respectively, say sources.

In a percentage purchase agreement signed between Walmart International Holdings and Flipkart Singapore on May nine, 2018, the former got 77 per cent of the stocks of Flipkart for round $16 billion. The tax department has asked Walmart to furnish details of 46 shareholders of Flipkart, how much each of them have received from the deal.

Sources said the tax calculation depends on each shareholder’s country of origin and whether or not India has a Double Taxation Avoidance Agreement with these jurisdictions. While short term capital achieve tax of a most of 40 per cent could also be applicable on SoftBank, one of the crucial main shareholders of Flipkart, eBay, some other main shareholder, will also have to pay short term capital beneficial properties tax however its charge of tax may be 20 per cent making an allowance for DTAA with Singapore. The tax department is yet to calculate the real tax applicable since Walmart has not provided the details.

Earlier, the I-T department had rejected all applications made via shareholders in the Singapore-registered Flipkart Ltd looking for exemption from capital beneficial properties tax arising out of its sale of majority stocks to US retail large. The department simultaneously initiated inquiries against some alleged suspicious transactions and funding waft in the e-tailer.

The I-T is investigating the complex construction of investments made in Flipkart Ltd (Singapore), in particular via eBay, and has sought complete knowledge smart fund waft from eBay and other subsidiaries in the Flipkart Ltd. The eBay had made investments in Flipkart Singapore through a community of companies registered in more than a few jurisdictions. A Flipkart spokesperson had instructed TOI that the company would not love to remark on the ongoing I-T court cases.

The Tax department had also conveyed to Flipkart that there's no escape from capital beneficial properties tax because the General Anti-Avoidance Rule (GAAR) provisions are applicable on its care for Walmart. The GAAR provisions have come into operation from overview yr (AY) 2018-19 and the tax get advantages on capital achieve has been sought via Flipkart for monetary yr (FY) 2018-19 or AY 2019-20.

Suspecting tax evasion, tax officers are inquiring into the mismatch between the common 5-8 per cent losses booked via the e-tailer in previous years in comparison to the lack of Rs 46,901 crore debited in the accounts of the company in the yr of its sale.
Flipkart deal: I-T department asks Walmart to explain tax break up of Rs 7,439 crore Flipkart deal: I-T department asks Walmart to explain tax break up of Rs 7,439 crore Reviewed by kailash soni on September 13, 2018 Rating: 5
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