United States retail giant Walmart has said that it has complied with all the tax obligations on the final day of the deadline to file withholding tax certificate with the Indian Tax authorities.
The Bentonville behemoth has bought 77 percent stake worth $16 billion in India's largest online retailer Flipkart. The company, however, declined to reveal the quantum of taxes it paid.
The Indian Express quoting the spokesperson of the retail giant said "We take our legal obligations seriously, including paying taxes to governments where we operate. Following our Flipkart investment, we have now completed our tax withholding obligations under the guidance of the Indian Tax authorities."
According to the Income-tax (IT) department rules, the deadline for the deposit of tax deducted/collected at source is the seventh day of the following month. It is to be noted that withholding tax, which is a retention-based tax, is to be deducted at source by the acquirer before making payment to the selling entity.
As the Walmart had closed the deal with Flipkart on August 18, the Income Tax Department was expecting the filing of the withholding tax certificate by September 7.
Tax department levies a long-term capital gains tax at the rate of 20 percent for stake sold by foreign investors after 24 months of the date of purchase. The Industry tax experts had estimated the tax gain for government to be about $2 billion.
However, the amount will vary depending on the tax departments' decision to allow certain former stakeholders of Flipkart to get relief from withholding tax/TDS at a lower or nil rate under Section 197 of the I-T Act.
The tax department has received the request from some stakeholders who had exited Flipkart in the Walmart deal to calculate their final tax liability where they were exploring grounds for a lower withholding tax rate. They wanted a clarification that whether they are covered under a tax treaty with countries like Singapore and Mauritius.