Flipkart Tax Case: eBay Singapore Wins As Tax Tribunal Rejects India's Claim on Capital Gains

The Mumbai Income Tax Appellate Tribunal has ruled that eBay Singapore Services is not liable to pay capital gains tax in India on the sale of its Flipkart Singapore shares, granting relief under the India–Singapore Double Taxation Avoidance Agreement.

The ruling stands in contrast to the Tiger Global–Flipkart case, where Mauritius-based entities were denied treaty benefits.

The Flipkart tax case traces back to Walmart’s 2018 acquisition of a majority stake in Flipkart, when investors such as eBay and Tiger Global exited the company, leading to capital gains tax disputes with Indian tax authorities.

In this case, eBay Singapore’s sale of Flipkart Singapore shares to FIT Holding, another Singapore-based entity, resulting in short-term capital gains of Rs 2,257.91 crore. The revenue department had argued that since Flipkart’s underlying business and value were linked to India, the gains should be taxable here. It further claimed that eBay Singapore’s management and control were effectively in the United States, not Singapore, and that the company should, therefore, not qualify for DTAA benefits.

The ITAT rejected these arguments, ruling that Article 13(5) of the India–Singapore DTAA gives exclusive taxing rights to the country of residence and in this case, Singapore, for gains arising from the sale of shares. It emphasised that eBay Singapore had produced a valid tax residency certificate from Singapore, making it eligible for treaty protection.

The tribunal observed that while Indian domestic law (Section 9(1)(i) can tax indirect transfers of Indian assets, these provisions cannot override treaty allocations when the treaty is more beneficial to the taxpayer, as provided under Section 90(2) of the Income Tax Act.

Importantly, the ITAT highlighted that the India–Singapore tax treaty does not contain a “look-through” clause, unlike the India–Mauritius or India–Cyprus DTAAs, which allow India to tax capital gains from shares deriving value from Indian assets.

"Historically, many high-value exits from India have been structured through Singapore holding vehicles as it is a credible and substance-rich jurisdiction. This case is another reminder that the capital gains on the transfer of Flipkart Singapore shares are taxable only in Singapore, not India," Amit Maheshwari, tax partner at AKM Global, said.

The absence of a look-through clause in this treaty is a key factor here, and the tribunal also emphasized that a valid Singapore Tax Residency Certificate is "strong evidence of treaty eligibility unless the Revenue can prove the Singapore structure is merely a conduit".

Maheshwari added that this decision contrasts sharply with the Tiger Global–Flipkart matter, where Mauritius-based entities were denied treaty benefits, and the case is now pending before the Supreme Court.

The ruling reinforces Singapore’s position as a credible and investor-friendly jurisdiction for global funds, private equity and multinational groups.