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Walmart-Flipkart deal: Sachin Bansal to be richer by $1 bn but he has got 20% tax to pay

Walmart-Flipkart deal: Sachin Bansal to be richer by $1 bn but he has got 20% tax to pay

Flipkart is expected to sell 70-75 per cent stake to the Bentonville-based retail major but the final contours of the deal will be announced today evening. Bansal, who's also the executive chairman of Flipkart, will step down from its board after the final deal is through.

After his decision to sell the entire 5.2 per cent stake to the US retail behemoth Walmart, Flipkart co-founder Sachin Bansal would likely take away around $1 billion from the mega deal. But, he would also have to pay around 20 per cent capital gains tax, if he sells his stake. Flipkart is expected to sell 70-75 per cent stake to the Bentonville, Arkansas-based retail major but the final contours of the deal will be announced today evening. Bansal, who's also the executive chairman of Flipkart, will step down from its board after the final deal is through.

Sachin's decision to resign from the board came after his reported disagreement with the overall strategy that the company decided to follow after the stake sale. Sachin Bansal, along with Binny Bansal, co-founded Flipkart in 2007. While Sachin is leaving, Binny Bansal will continue to serve as the group CEO and will be additionally appointed as the next Executive Chairman. Flipkart CEO Kalyan Krishnamurthy - who steered Flipkart on its victory march in the Indian e-commerce market after it started losing market share for Amazon in 2017 - could stay on if Walmart comes up with a clause to retain the top talent for some time before the new management fully takes over.

As the mega deal will bring fortunes to the Flipkart promoter - and also to others who would sell their stake - he would also have to shell out high income tax being a citizen of India. "With regard to share purchase agreement entered into with India resident entity, Sachin Bansal and Binny Bansal in this case, capital gain would be charged in their hands and they have to pay 20 per cent income tax," Transaction Square Founder Girish Vanvari told PTI. Vanvari said the income tax law provides that taxes have to be withheld by the buyer if the share purchase agreement is being entered into with a non-resident entity.

While Walmart is expected to buy around 60 per cent stake in the company, Google parent Alphabet Inc may buy 15 per cent stake for about $3 billion.

According to a report in CNBC TV 18, SoftBank CEO Masayoshi Son confirmed that "Walmart has agreed to buy Flipkart". The report also claimed the deal has been finalised for 75 per cent stake in the company for $15 billion. As per the deal, SoftBank Group Corp, which is one of the biggest investors in Flipkart, through its Vision Fund, would likely sell its 20-plus per cent stake in the company for around $20 billion valuation.

The final details are expected to be out soon, but reports suggest other Flipkart investors - US hedge fund Tiger Global Management, South African tech investor Naspers and venture capital firm Accel - are will retain only small stakes in Flipkart, the report said.

 

Published on: May 09, 2018, 3:27 PM IST
Posted by: Manoj Sharma, May 09, 2018, 3:27 PM IST