The Income Tax department has benefited exceptionally with the Walmart's acquisition of 77 per cent stake in Flipkart. It will receive over £1 billion as the American retail giant agreed to pay all dues in consultation with the government. The payment will bring an end to uncertainty regarding tax dues related to the $16 billion transaction, that includes a $2 billion fresh investment.
A spokesperson for Walmart said, “We take our obligations seriously, including paying taxes to governments where we operate. Following our Flipkart investment, we have now completed our tax withholding obligations under the guidance of the Indian Tax authorities.” A team of executives from Walmart headquarters, Bentonville, USA, had held discussions with Akhilesh Ranjan, head of the foreign taxation unit in the IT department. Reports on how the Walmart-Flipkart deal will help the government clean up $1.5-2 billion in taxes had begun doing the rounds in August.
The deal caught the public eye for several reasons, especially when some of the sellers sought exemptions from paying capital gains tax. The government had rejected the demand for an exemption and fixed September 7 as the deadline for clearing dues. A bulk of the tax accruing to the Centre from the deal will be in the form of withholding tax that has been paid by the American giant on behalf of those selling shares such as SoftBank, eBay, Naspers, Besides, Indian investors, including Flipkart co-founder Sachin Bansal.
The tax department has been keeping close tabs on the transaction and had raised queries as soon as the deal was finalised, intending to avoid a repeat of the Vodafone-type situation were the telecom company did not deduct tax dues before closing the deal with Hutchison Whampoa.
