The Income Tax Department has reportedly sent notices to Flipkart founders Sachin Bansal and Binny Bansal, seeking information on total income earned and capital gains accrued following US-retail giant Walmart's buyout of the home-grown firm, a media report said.
The I-T Department sent notices to 35 others who had shares in the company, The Times of India reported. “There was a query received with regard to sale of shares and payment of advance taxes. It happened a few months ago and I had already responded to the same,” Binny Bansal was quoted as saying by the newspaper.
In May this year, Walmart bought 77 percent stake in Flipkart for about $16 billion (Rs 1.05 lakh crore), its biggest deal which would give the US retailer access to Indian e-commerce market that is estimated to grow to $200 billion within a decade.
The deal, wherein co-founder Sachin Bansal and Japan's Softbank Corp Group exited, valued Flipkart at $20.8 billion.
Walmart paid Rs 7,439 crore tax on payments it made to buy-out shares of 10 major shareholders of Flipkart.
As many as 44 shareholders of Flipkart, including significant ones like SoftBank, Naspers, venture fund Accel Partners and eBay, had sold their holdings to Walmart.
Walmart on 7 September, the last date for depositing taxes with the Indian authorities, paid Rs 7,439 crore withholding tax on payments made to 10 shareholders of Flipkart.
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 case of the Walmart-Flipkart deal, the withholding tax pertains to the capital gains made by the shareholders of Flipkart.
Sachin and Binny both held 5.5 percent stake each in Flipkart. After the deal, Sachin Bansal made little over Rs 6,700 crore.
Binny Bansal, who had co-founded Flipkart with Sachin 11 years ago, retained his 5.5 percent stake and continued as CEO of the firm until recently. On 13 November, Binny Bansal resigned over an alleged 'serious personal misconduct'.
Founded in 2007, Flipkart has led India’s e-commerce revolution. The company has grown rapidly and earned customer trust, leveraging a powerful technology foundation, including artificial intelligence, and emerging as a leader in electronics, large appliances, mobile and fashion and apparel.
In a market where Walmart expects e-commerce to grow at four times the rate of overall retail, and with well-known platforms such as Myntra, Jabong and PhonePe, Flipkart is uniquely positioned to leverage its integrated ecosystem, which is defined by localized service, deep insights into Indian customers and a best-in-class supply chain.
With inputs from agencies
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Updated Date: Nov 22, 2018 14:12:41 IST