Flipkart co-founder Sachin Bansal has deposited Rs 699 crore as advance tax, including his capital gains tax from the Flipkart-Walmart deal, for Q1 FY19.
His partner Binny Bansal, however, is yet to disclose capital gains made on his stake sale in the e-commerce platform, sources in the Income Tax Department told the paper. Both Bansals held more than five percent stake each in Flipkart.
Earlier, the I-T Department had issued notices to Flipkart founders Binny and Sachin Bansal to disclose their total income from the Walmart-Flipkart deal. The department had sent notices to Flipkart’s promoters as well as 35 other stakeholders.
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.
In September 2018, US retail giant Walmart paid Rs 7439 crore tax on payments it made to buy out shares of 10 major shareholders of Flipkart. The retail giant was later asked to furnish details of how much each of 46 shareholders of Flipkart gained from the deal.
Flipkart shareholders, including SoftBank, Naspers, and venture fund Accel Partners and eBay, had sold their holdings to Walmart.
Media reports suggest that Walmart may pay USD 2 billion (around Rs 13,750 crore) as 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 on 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, according to media reports.
The tax department is yet to calculate the actual tax applicable as it is still investigating some alleged suspicious transactions, particularly by eBay, and investment flow in Flipkart, the report added. eBay is said to have invested in Flipkart Singapore through a network of companies registered in various jurisdictions.― Moneycontrol