Walmart yet to pay taxes for 34 stakeholder in Flipkart deal; it paid ₹7,439 crores for 10 stakeholders

Walmart

US-based global retail giant Walmart has been in the news since it acquired the Indian e-commerce giant Flipkart in a deal worth $16 billion.

In a recent development, tax officials claim that the ₹7,439 crores paid in taxes represent only the 10 major stakeholders, while the taxes are yet to be received for the other 34 stakeholders in the Flipkart deal.

In the Flipkart deal, there were 44 major stakeholders who sold their holdings to Walmart. It included major stakeholders like Accel Partners, Naspers, SoftBank, and eBay.

“Of the 44 shareholders in Flipkart who have sold shares, Walmart has deposited taxes for only 10 funds and entities. We have asked Walmart to explain the rationale followed while deducting or not deducting taxes from the shareholders. They have been asked to give a case to case explanation,” a tax department official said.

Walmart had paid ₹7,439 crores worth withholding taxes to the Indian authorities on payments made to 10 stakeholders of Flipkart, on 7th September, the last date for depositing taxes.

Withholding tax or retention tax is an income tax to be paid to the government by the payer of the income rather than the recipient of the income. The tax is withheld or deducted from the income due to the recipient.

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

A Walmart Spokesperson said, “We take our legal obligations seriously, including paying taxes to governments where we operate. Following our Flipkart investment, we have completed our tax withholding obligations under the guidance of the Indian Tax authorities. We will continue to work with authorities to respond to their queries.”

Flipkart shareholders can be broadly classified into three categories, foreign investor with more than 5% holdings, foreign investors with less than 5% holdings, and Indian residents.

According to industry sources, Walmart may have followed the withholding tax provisions for small investors in not deducting tax on payments made to them.

Certain stakeholders of Flipkart had last month approached the tax department seeking exemption from levy of the taxes. Their application is still under review by the IT department.

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