Walmart-Flipkart deal: IT Dept sends notices to Binny & Sachin Bansal, 35 others

Walmart-Flipkart deal: IT Dept sends notices to Binny & Sachin Bansal, 35 others

The Income Tax Department has issued notices to Flipkart founders Binny and Sachin Bansal to disclose their total income from the Walmart-Flipkart deal, The Times of India reported.

The Bansals have been reportedly asked to explain the total payment received from the Walmart-Flipkart deal, the capital gains tax liability and how they have scheduled these tax payments.

“There was a query received with regard to the sale of shares and payment of advance taxes. It happened a few months ago and I had already responded to the same,” Binny Bansal told the paper.

The department has sent notices to Flipkart’s promoters as well as 35 other stakeholders. Both Bansals had more than 5 percent stake each in Flipkart.

In May, global retail giant Walmart acquired a 77 percent stake in Bengaluru-based online retailer for $16 billion as it forayed into India’s exploding e-commerce market.

Read — Flipkart-Walmart deal: 10 things you should know

Earlier, the I-T Department had served notice to Walmart asking it to furnish details of 46 shareholders of Flipkart, and how much each of them gained from the deal.

The Bansals have not responded to the I-T notice sent to them on October 18, while responses of other Indian shareholders have started pouring in, sources told the paper.

In September, Walmart had paid Rs 7,439 crore tax on payments it made to buy out shares of 10 major shareholders of Flipkart.

Read: Walmart may pay $2 billion withholding tax for Flipkart deal

Media reports suggest that Walmart may pay $2 billion (around Rs 13,750 crore) withholding tax to authorities for the Flipkart deal. Withholding tax, or retention tax, is an income tax to be paid to the government by the payer of the income rather than recipient of the income. The tax is withheld or deducted from the income due to the recipient.

In the case of the Walmart-Flipkart deal, the withholding tax pertains to the capital gains made by shareholders of Flipkart.

As per the domestic tax law, long term capital gains is levied at 20 percent for shares sold by foreign investors after 24 months of purchase. However, short term capital gains tax of up to 40 percent may be applicable on SoftBank and about 20 percent on eBay considering the Double Taxation Avoidance Agreement (DTAA) with Singapore, the report said.

Also see: After Binny Bansal’s exit, Flipkart could be staring at more trouble

The tax department is yet to calculate the actual tax applicable as it is still investigating some alleged suspicious transactions and investment flow in the company, the report added.