Flipkart-Walmart deal: SoftBank may retain its stake for a year to cut tax liability

In a new development in the Walmart-Flipkart deal, SoftBank is considering retaining all of its stake in the Indian e-commerce player for at least one more year to avoid paying a large tax, according to a Mint report.

While Flipkart is reportedly inching closer to sealing the deal to sell its majority stake to the US retail giant for at least USD 12 billion, SoftBank is yet to finalise on the portion of its 20 per cent holding it will sell and the time of the deal.

The company will take at least one more week to decide on its stake sale. This delay is expected since it is considering to seal the deal without attracting a hefty tax liability, reported the publication quoting its sources familiar with the matter. A final decision may come next week after discussions with tax experts over the issue, they said.

Meanwhile, the Flipkart buy has received strong objection by traders' body Confederation of All India Traders (CAIT). Calling the proposed deal an “escape route” by the foreign company to enter India, it demanded scrutiny of the deal. “It is really unfortunate that in spite of having a clear FDI policy, foreign companies are finding an escape route, whether it is in retail or e-commerce,” CAIT said in a statement.

It further demanded that the government form a regulatory authority for e-commerce and till the authority is formed, no such deal be allowed.

The Flipkart-Walmart deal may be one of the largest deals in the retail sector and by far, the biggest in the country's booming e-commerce market.