Bengaluru-based Practo Technologies, which is dominating India's Health-Tech sector with five acquisition in last 3 years and highly funded health-tech startup, is being investigated by Indian authorities looking into whether it evaded tax through a cross-border corporate restructuring.
According to a notice from the Bangalore office of the Department of Income Tax seen by Nikkei Asian Review, Practo executives have been summoned to explain wide discrepancies between different company valuations conducted just a month apart in 2014. The lower valuation was used in calculating capital gains tax owed on the transfer of assets to an offshore affiliate in Singapore. The tax authorities searched Practo's offices in Bangalore and seized company records in late May, according to an official familiar with the investigation.
The difference between the value of Practo's intellectual property in 2014 and the company itself a year later caught the attention of the tax department, according to an official there. Much of the value of many startups lies in their intellectual property, as their fixed assets are usually relative insignificant to their businesses, according to what Dhananjayan Subramanian, an independent tax consultant in Chennai told to Nikkie Asian Review.
Practo's platform helps consumers in India and 14 other countries with finding doctors, booking appointments and medical tests, and ordering medicines. It also provides online medical consultations. The company says it has handled 50 million appointments with some 200,000 health care providers.
Til date, the company has raised $179M in 4 rounds from 11 investors including Google's parent company - Alphabet, China's Tencent Holdings, and Sequoia Capital.
Practo last raised $55 million in Series-D round of funding with valuation of around $600 million.
Till writing of this content piece, Practo has not responded to IndianWeb2 email query while the Bangalore income tax office declined to comment, citing policy on cases under investigation.
According to a notice from the Bangalore office of the Department of Income Tax seen by Nikkei Asian Review, Practo executives have been summoned to explain wide discrepancies between different company valuations conducted just a month apart in 2014. The lower valuation was used in calculating capital gains tax owed on the transfer of assets to an offshore affiliate in Singapore. The tax authorities searched Practo's offices in Bangalore and seized company records in late May, according to an official familiar with the investigation.
The difference between the value of Practo's intellectual property in 2014 and the company itself a year later caught the attention of the tax department, according to an official there. Much of the value of many startups lies in their intellectual property, as their fixed assets are usually relative insignificant to their businesses, according to what Dhananjayan Subramanian, an independent tax consultant in Chennai told to Nikkie Asian Review.
Practo's platform helps consumers in India and 14 other countries with finding doctors, booking appointments and medical tests, and ordering medicines. It also provides online medical consultations. The company says it has handled 50 million appointments with some 200,000 health care providers.
Til date, the company has raised $179M in 4 rounds from 11 investors including Google's parent company - Alphabet, China's Tencent Holdings, and Sequoia Capital.
Practo last raised $55 million in Series-D round of funding with valuation of around $600 million.
Till writing of this content piece, Practo has not responded to IndianWeb2 email query while the Bangalore income tax office declined to comment, citing policy on cases under investigation.
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