With the mega deal between Walmart and Flipkart likely to be announced soon, tax authorities are keeping a close watch, reported The Economic Times.
The report said that the authorities have send letter to Walmart’s Indian office seeking details of the deal. The letter also provided details about the laws relevant to such deals, the report further added, quoting a source.
Similar letter has been sent to Flipkart seeking clarifications, according to the report.
The actions of the tax department comes in order to ensure that it gets the required tax from the deal, in accordance with the The Finance Act of 2012, the report said.
As per this, the report said, ‘all persons, whether resident or non-resident, having business connections in India, have to withhold tax even if a transaction is executed on foreign soil. The withholding tax in the case of long-term capital gains tax is 10-20% depending on the nature of the investment.’