Antfin, a subsidiary of Chinese e-commerce giant Alibaba Group, will be exempt from paying capital gains tax for its Rs 2,100-crore stake sale in Paytm on May 13, tax experts have told Moneycontrol.
Although Antfin and Alibaba are China and Hong Kong-based entities, the current investment in Paytm has been routed through Antfin’s Dutch entity.
The Paytm stock ended at Rs 850 on May 14, down 0.7 percent from the previous close. The stock slipped 4 percent on May 13 after Antfin offloaded 2.54 crore shares at around Rs 824.6 apiece.
The double tax avoidance agreement (DTAA) between India and the Netherlands exempts capital gains tax.
According to tax experts, the entity needs to fulfil two conditions for the exemption. One, the entity needs to own a stake of less than 10 percent in the company whose shares are being sold. Antfin is one of the oldest investors in Paytm and owns a 9.85 percent stake.
The second condition, according to experts, is that the Dutch entity should sell these shares to a foreign entity. According to bulk deal data, the shares were sold to clients of Goldman Sachs Singapore.
An email sent to Antfin seeking comments remained unanswered.
Under the India-Netherlands tax treaty, any gains arising to a Netherlands resident is exempt from Indian capital gains tax, if the Netherlands resident owns less than 10 percent stake in the Indian entity. However, the Netherlands entity will be required to meet the commercial substance requirement to avail the tax treaty exemption," said Amit Singhania, founder, Areete Law Offices.
Antfin, before the share sale, was the third largest shareholder in Paytm after Vijay Shekhar Sharma and private equity firm SAIF Partners.
Sharma, Paytm’s founder, directly owns a 9.05 percent stake in the company. He indirectly owns another 10.24 percent stake in the company through a foreign entity named Resilient Asset Management. SAIF Partners owns 15.35 percent through two entities.
On August 7, 2023, Resilient acquired a 10.3 percent stake in Paytm from Antfin, making it the largest shareholder in the company. The deal was done through the issuance of Optionally Convertible Debentures and had no cash consideration. At the time of the deal, Paytm was trading at around Rs 850-890 a share.
Last week, One97, the Paytm parent, and Sharma settled a case with the Securities and Exchange Board of India by paying more than Rs 2.2 crore as a settlement fee.
The company also agreed to cancel 2.1 crore ESOPs granted/vested and non-exercised by Sharma and over 2.22 lakh ESOPs granted but not exercised by his brother, Ajay Shekhar Sharma.
Paytm shares have underperformed the market. In 2025, the stock has fallen more than 14 percent against a 3.2 percent rally in the benchmark Sensex during the period.
Soon after listing, Paytm touched a lifetime high of Rs 1,782 in November 2021. Since then, the stock has not crossed Rs 1,000 except for a very short period late in 2024.
Paytm has a market capitalisation of Rs 55,000 crore. In the December quarter, Paytm generated a revenue of 1,491 crore, up from Rs 1,265 crore in the previous quarter. It reported a net loss of Rs 205 crore against a profit of Rs 821 crore in the September quarter, stock exchange data shows.
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