NEW DELHI: Income tax authorities have started examining in detail US retailer Walmart’s takeover of Indian e-commerce major Flipkart. Income tax authorities had written to Flipkart, prior to the deal’s announcement, seeking details of the transaction to examine the tax implications of the transaction for the government.“They have provided details of the transaction,” the official said. Transaction details are crucial for the income tax department to ascertain tax liability since many investors in Flipkart, who sold their stake in the deal with Walmart, are non-residents. Also, Flipkart’s parent entity is registered in Singapore.The income tax department had also written to Walmart seeking details of the Flipkart deal, apprising the company about Indian tax laws including that on indirect transfers and that it could approach the company for any clarity in provisions. Walmart, the tax official said, is yet to formally respond to the department’s letter.The income tax department believes that tax provisions relating withholding tax will come into play in respect of non-resident investors in Flipkart that have sold their holdings to Walmart.

Source: Economic Times May 30, 2018 18:02 UTC