Income Tax Department investigates Flipkart's overseas shareholders on profit

By

Isabelle Crossley

Published
Nov 30, 2018

The Income Tax Department is continuing to investigate profits made from the sale of a 77 percent stake of Flipkart to Walmart and has asked foreign shareholders to give details on income earned from the deal.

“Authorities have written to the overseas shareholders in Flipkart seeking details,” a government official with knowledge on the matter told the Economic Times. Foreign shareholders will need to provide the department with details on their previous holdings, the sale price, and their tax liability.

The development follows the Income Tax Department’s decision to investigate Flipkart’s co-founders Sachin Bansal and Binny Bansal who, although have now left the business, are required to give further details on profits made from selling their respective stakes in the business.

The Income Tax Department is working to ascertain if Walmart has correctly disclosed its withholding tax liability over the acquisition of Flipkart. However, the department is doing this to glean information, not because it suspects foul play. “This is just an informal communication aimed at eliciting information,” said the government source.

Walmart acquired a 77 percent stake in Flipkart in May this year for an estimated $16 billion (Rs 1 lakh crore). The US business bought shares from around 44 shareholders, some of whom were foreign investors.