Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.


Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence


Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
2-min read

Flipkart Deal: Tax Dept Will Act Once Walmart Obtains Regulatory Nod

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


Updated:June 3, 2018, 12:49 PM IST
Flipkart Deal: Tax Dept Will Act Once Walmart Obtains Regulatory Nod
Representative image

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

The department is currently 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 US 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 Income tax department has power to issue notices u/s 133(6) of IT Act to any party involved in this mega deal, including Flipkart, Walmart or any of the investors selling their stake.

"If the department is not satisfied with the reply/ explanation furnished by the purchaser/ payer, it may hold the purchaser/ payer as 'assessee in default' for failure to withhold appropriate taxes u/s 195 of the Act," Nangia said.

The department currently is going through the Section 9 (1) of the Income Tax 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.

Singapore-registered Flipkart Pvt Ltd holds majority stake in Flipkart India.

Walmart had, on May 9, announced that it will pay about $16 billion to buy about 77 per cent stake in Flipkart. Significant shareholders in the Bengaluru-based company like SoftBank, Naspers, venture fund Accel Partners and eBay has agreed to sell their shares, as well as Sachin Bansal.

Experts, however, said that the only regulatory clearance that the deal would need is from the CCI.

According to V Lakshmikumaran, Managing Partner of law firm Lakshmikumaran & Sridharan: "Under Section 6 of the Competition Act, the Walmart will have to seek clearance from the CCI as it is going to be a major player in the e-commerce sector".

Besides, Walmart will also have to adhere to the guideline of the Commerce Ministry on market place model of e-commerce which allows 100 per cent FDI under automatic route, he said.

As per DIPP guidelines, market place model means providing an information technology platform by an e-commerce entity on a digital and electronic network to act as facilitator between a buyer and seller.

E-commerce marketplaces are permitted to provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. However, such entities will not exercise ownership over the inventory.

Regulatory clearances have become important in the wake of complaints filed by RSS-affiliate Swadeshi Jagran Manch (SJM) to the Department of Industrial policy and Promotion (DIPP) alleging that US retail giant Walmart was "circumventing" rules for a "back-door entry" into India.

The DIPP has referred SJM's complaint to the ED, Reserve Bank, Comptetion Commission of India (CCI) and the Income Tax Department.

Besides, traders body CAIT too has complained to the Enforcement Directorate for alleged violation of the government's foreign direct investment (FDI) policy. It has also approached the CCI saying that the deal will create unfair competition and an uneven level playing field for domestic players.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months. Use code FREEDOM.

| Edited by: Nitya Thirumalai
Read full article
Next Story
Next Story

Also Watch

Most Active
Company Price Change %Gain
SBI 277.25 2.27
Yes Bank 61.60 3.97
HDFC Bank 2,227.00 2.97
Indiabulls Hsg 484.15 3.48
HDFC 2,117.80 3.62
Company Price Change %Gain
Yes Bank 61.85 4.39
SBI 277.15 2.23
Indiabulls Hsg 484.10 3.46
Bharti Infratel 245.20 -0.75
Maruti Suzuki 6,260.00 0.08
Top Gainers
Company Price Change %Gain
Yes Bank 61.80 4.30
Adani Ports 362.45 3.75
Indiabulls Hsg 479.00 2.38
HDFC 2,098.35 2.67
Larsen 1,330.00 3.38
Company Price Change %Gain
Yes Bank 61.60 3.97
HDFC 2,118.50 3.78
Larsen 1,329.40 3.29
Bajaj Finance 3,269.75 2.97
HDFC Bank 2,225.90 2.90
Top Losers
Company Price Change %Gain
JSW Steel 212.00 -3.92
Tata Steel 335.40 -2.85
Hindalco 175.60 -2.58
Vedanta 135.35 -1.49
Hero Motocorp 2,575.10 -2.47
Company Price Change %Gain
Tata Steel 335.10 -2.81
Vedanta 133.25 -3.09
Hero Motocorp 2,576.10 -2.43
Sun Pharma 419.00 -2.03
Coal India 184.05 -2.13

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results