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Walmart may approach I-T dept to determine tax liability in Flipkart deal

Press Trust of India  |  New Delhi 

US-may approach Indian authorities seeking certificates for determining the tax liability in the USD 16 billion buyout deal.

Following CCI's nod to the Walmart-deal, the I-T department expects to approach it under Section 197 of the Income Tax Act within a fortnight.

We were told that the deal would be closed within a week of the () approval. So we expect them to file with the I-T authorities seeking certificate under Section 197 within a fortnight," an I-T said.

Under Section 197, any NRI selling shares can give reasons to Indian authorities as to why they should be taxed at a lower or nil rate in

last month assured the I-T department that it will fulfil all tax obligations.

Bengaluru-based had in May shared share purchase agreement with tax authorities, and I-T department is currently calculating the tax rate that would be applicable for investors in Flipkart who are selling the shares to Walmart.

The I-T department is going through the share purchase agreement, reading in depth which investor has routed money from which jurisdiction and when and whether any treaty benefit apply to them, the added.

said lower or nil order obtained under Section 197 before making payment to Flipkart shall act as a provisional assessment of the transaction.

The payee can represent the case before tax authorities to determine the withholding tax implication on the transaction and the payer has to consider the lower/nil withholding tax order at the time of making payment to Flipkart, Nangia said.

Walmart on May 9 had announced that it will pay approximately USD 16 billion to buy about 77 per cent stake in Flipkart.

Significant shareholders in Flipkart, like SoftBank, Naspers, venture fund and eBay, have agreed to sell their shares. Also would be selling his stake to the US

The department has been reviewing Section 9 (1) of the I-T Act, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like and Mauritius, could be available for foreign investors selling stakes to Walmart. Singapore-registered holds majority stake in

In May, the I-T 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.

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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, August 09 2018. 13:05 IST