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Bengaluru based start-up Practo being investigated for tax evasion

Bengaluru based start-up Practo being investigated for tax evasion
24 Jun 2017
  • Bengaluru-based healthcare start-up Practo is reportedly being probed by the Income Tax department for tax evasion allegedly through a cross-border corporate restructuring.
  • I-T Department Office in Bengaluru issued a notice, summoning Practo executives for explaining the wide discrepancies between the start-up's valuations within short time.
  • Tax authorities also reportedly searched Practo's Bengaluru offices and seized records in May'17.

  • About Practo, the health start-up
  • Practo is an application that allows users to search and book doctor appointments, diagnostic tests, and online consultation.
  • Consumers can also manage health records and medicine online.
  • The start-up partners with healthcare providers like doctors, hospitals, clinics, and diagnostic centers to help them manage patients.
  • In Jan'17, CEO Shashank ND had also announced plans to venture into the health insurance sector.

  • Multiple certified valuation reports recovered
    Raid details
  • The May'17 I-T raid reportedly revealed multiple valuations of Practo by different accounting firms in 2014.
  • The lower valuation was used for calculating capital gains tax owed on the transfer of its assets to a Singapore affiliate in Aug'14.
  • The start-up sold its assets, including the website, domain name, software codes, and trademarks, to Singapore's Practo Pte Ltd. for $600,000.

  • Huge discrepancies between valuations
    One certified valuation from Jul'14, only a month before the asset sale, put Practo's worth at Rs. 462 crore. However, in Aug'14, another Bengaluru-based accounting firm, which valued the intellectual property assets, put the company's valuation at only Rs. 4 crore.

    2015-17: Funding and valuations
  • In Aug'15, Practo raised $80 million from China's online giant Tencent at a valuation of $525 million, only a year after the Singapore asset sale.
  • In Jan'17, the start-up raised $55 million in a Series-D funding led by Tencent that totaled its value to $620 million.
  • The huge gap between Practo's valuations in short periods of time caught I-T Department's attention.

  • This post first appeared on NewsBytes: Latest News, Breaking News India, Today News, Current News, please read the originial post: here

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