Thirty-four of the total 44 entities that sold their Flipkart shares to Walmart used a provision under the Income Tax Act to avoid paying capital gains tax, Financial Express reported.

The tax department has questioned Walmart to explain the methodology it employed in meeting its legal obligation of withholding tax and making payments to these companies, the report said.

Sources told the paper that the US retail giant paid only about Rs 7,450 crore to the tax department as “withholding tax” by the September 7 deadline.

According the report, Walmart did not withhold taxes from the 34 entities under the Section 9 of the Income Tax Act.

Walmart had completed the acquisition of 77 percent stake in Flipkart in mid-August.

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