The Supreme Court of India has held that US-based investment firm Tiger Global is liable to pay capital gains tax in India on profits earned from the sale of its Flipkart stake to Walmart in 2018. The ruling overturns a Delhi High Court decision that had earlier allowed the investor to claim tax exemption under the India–Mauritius Double Taxation Avoidance Agreement.
According to media reports, the dispute centred on Tiger Global’s use of Mauritius-based entities to route its investment in Flipkart and claim treaty benefits. The apex court ruled that merely holding a tax residency certificate was not sufficient to claim exemption if the underlying transaction lacked commercial substance and was structured primarily to avoid tax.
A bench of Justices J B Pardiwala and R Mahadevan observed that India has the sovereign right to tax income arising from assets located within the country. The court held that arrangements designed mainly for tax avoidance cannot be protected under treaty provisions or grandfathering clauses.
Tiger Global had earned approximately $1.6 billion by selling its stake in Flipkart as part of Walmart’s acquisition of the Indian e-commerce firm in a deal valued at about $16 billion. The Supreme Court’s decision means that the gains from this transaction will now be subject to Indian capital gains tax.
The ruling is expected to have wider implications for foreign investors using offshore holding structures to invest in Indian companies. Legal and tax experts say the judgment signals a stricter interpretation of tax treaties and could influence how future cross-border investments and exits from India are structured.
