BUSINESS

Flipkart deal: Taxman to act after Walmart obtains regulatory nod

E-commerce major Flipkart has shared ‘some details’ with the I-T authorities on its $16 billion deal with U.S.-based Walmart, but the tax department will act only after regulatory approvals have been obtained, an official said.

The department is studying the details received from the company, the official said, adding that they can issue notices seeking details of taxes withheld once the transactions are completed.

Last month, the tax department had written to Bentonville-Arkansas based Walmart saying that the U.S. company can seek guidance about the tax liability under Section 195 (2) of the I-T Act.

Under Section 195 of the Act, anyone making payment to non-residents is required to deduct tax (commonly known as withholding tax).

The official said Flipkart has filed “some details” with the tax authorities and the same are being examined.

“There is no action required right now on our part. We will wait till the regulatory clearances are obtained,” the official told PTI.

Nangia Advisors LLP Managing Partner Rakesh Nangia said the I-T Department has power to issue notices under Section 133(6) of the I-T Act to any party involved in this mega deal, including Flipkart, Walmart or any of the investors.

Indirect transfer

The department is currently going through Section 9 (1) of the I-T law, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like Singapore and Mauritius, could be available for foreign investors selling stakes to Walmart.