In a landmark decision, the Supreme Court of India has delivered a ruling against Mauritius-based Tiger Global International, upholding the Income Tax Department's right to tax the Private Equity major in relation to its exit from e-commerce major Flipkart in 2018. The ruling marks the end of a long-standing legal battle on whether offshore investment vehicles can claim tax exemptions for indirect transfers of Indian assets.
Through the ruling, the apex court has effectively overturned a 2024 Delhi High Court judgment that had previously exempted the private equity major from capital gains tax, under the India-Mauritius Double Taxation Avoidance Agreement (DTAA) - a tax avoidance treaty that was in place at the time.
The SC bench comprising Justices J.B. Pardiwala and R. Mahadevan ruled that the Mauritian entities were merely 'see-through entities' or conduits used to avail treaty benefits without having real commercial substance. Therefore, the court upheld the findings of the Authority for Advance Rulings (AAR), noting that the 'head and brain' of the companies and thus, their real control of the management was located in the United States rather than Mauritius.
Furthermore, the bench clarified that while a Tax Residency Certificate (TRC) is a necessary "eligibility condition," it is not "sufficient" evidence to preclude an investigation into tax avoidance under modern statutory frameworks like the General Anti-Avoidance Rule (GAAR).
Tiger Global - Flipkart Tax Case: What You Must Know
The case tracks back to a 2018 mega deal, where Walmart Inc. acquired a majority stake in Flipkart. As part of this transaction, Tiger Global sold its approximately 17% stake in Flipkart Singapore to a Walmart affiliate for roughly $1.6 billion.
This led to objections from the Indian tax authorities, which claimed that Tiger Global wrongly used the India-Mauritius tax avoidance treaty to not pay any taxes on its profits, whereas the private equity claimed the treaty exempted such a transaction.
The Supreme Court has been hearing this case since January 2025, after the Indian tax authorities had challenged the Delhi High Court order made in 2024.
Tiger Global - Flipkart Tax Case: What's Next?
The Supreme Court verdict effectively means Tiger Global now faces a substantial tax liability on the $1.6 billion sale proceeds. It also suggests that Indian tax authorities will "look through" offshore vehicles to determine the real beneficial owners.
Reacting to the verdict, National Leader, International Tax and Transaction Services at EY India, said the ruling may have wider implications and won't be restricted to just Tiger Global. Therefore, investors using Mauritius or Singapore as gateways will now need to demonstrate genuine management and physical presence in those countries.
"While the Judgement relates to Capital Gains arising to a Taxpayer seeking the benefit of the India Mauritius Treaty, the principles laid down in the Judgment are likely to impact Taxpayers from various Jurisdictions, including, for instance, Taxpayers seeking relief under the India Singapore Treaty," he said.
