Against an expectation of collecting around Rs 20,000 crore in the form of withholding tax in the Walmart-Flipkart deal, it now appears the Indian government has been able to get only Rs 7,439 crore, as per a PTI report.
It has also come to light that of the total 44 entities that sold their holdings in Flipkart to Walmart constituting a total 77%, this tax amount pertains to only 10 and the other 34 shareholders have either not paid the tax or feel they don’t owe any tax.
The issue will now be taken up by the Indian Income Tax authorities with both Walmart as well as the 34 shareholders. To start with, the department is said to have sent a communication to Walmart asking for complete party-wise details so that it can take it up for scrutiny. The last date for depositing the amounts deducted in the deal was September 7 and that is how this information is emerging now.
The Indian tax authorities have been keeping a close eye on the Walmart takeover of Flipkart from day one and had been in touch with the American giant and Singapore-registered Flipkart.
Experts feel there are provisions in the relevant taxation laws that exempt foreign entities who are holding less than 5% share in a company and who do not exercise any rights or influence in the management of the company from paying capital gains tax if and when they sell their shares in that company.
Walmart has held on to its stated position that it dooes not flout any laws, including tax laws in every country it operates in and has once again expressed willingness to work with the Indian tax authorities to see that the issue is taken to its logical conclusion.
Meanwhile the IT department is sitting on the written requests of a few shareholders of Flipkart to be exempted from paying any tax on their part as they are covered by the exemptions under the law. Sources in the department have confirmed to PTI that they have indeed received the applications and they are yet to come to any conclusion on them.