Supreme Court Clears Tiger Global of Capital Gains Tax in Flipkart Exit: Major Relief for Foreign Investors
Date: 15 January 2026
Case: Authority for Advance Rulings (Income Tax) v. Tiger Global International Holdings
Citation: 2026 INSC 60
Introduction: A Landmark Ruling for Cross-Border Investments
In a decisive judgment with far-reaching implications for foreign investors, private equity funds, and international tax planning, the Supreme Court of India has ruled in favour of Tiger Global’s Mauritius-based entities, holding that capital gains arising from the sale of Flipkart shares are not taxable in India.
The verdict reaffirms the sanctity of the India–Mauritius Double Taxation Avoidance Agreement (DTAA) and provides long-awaited clarity on grandfathering, GAAR, indirect transfers, and the evidentiary value of a Tax Residency Certificate (TRC).
Background: The Flipkart–Walmart Transaction
- Tiger Global entities were incorporated in Mauritius and held Category I Global Business Licences (GBL-I).
- They invested in Flipkart Singapore between 2011 and 2015.
- In 2018, as part of Walmart’s acquisition of Flipkart, Tiger Global exited by selling its Singapore shares to a Luxembourg entity.
- Indian tax authorities sought to tax the gains, alleging:
- treaty shopping,
- lack of commercial substance,
- and applicability of GAAR and indirect transfer provisions.
Core Legal Issues Before the Supreme Court
- Are capital gains from the sale of Flipkart Singapore shares taxable in India?
- Can Indian authorities disregard a valid Mauritius Tax Residency Certificate?
- Does GAAR apply to investments made before 1 April 2017?
- Can domestic indirect transfer rules override DTAA protections?
- Were the Tiger Global entities “conduit” companies?
Supreme Court’s Key Findings
1. Grandfathering Under India–Mauritius DTAA Is Absolute
The Court held that Article 13(3A) of the DTAA clearly grandfathers all investments made prior to 1 April 2017. Since Tiger Global’s investments were made well before this date:
Capital gains from their exit are exempt from Indian taxation.
This protection applies even if the sale occurred after 2017.
2. Tax Residency Certificate Is Binding
The Supreme Court reaffirmed that:
- A valid TRC issued by Mauritian authorities is conclusive proof of residence
- Indian tax authorities cannot go behind the TRC to re-examine control, management, or substance under Mauritian law
- Unless dual residency is established, Article 4 of the DTAA bars further enquiry
This reinforces the Court’s earlier rulings in Azadi Bachao Andolan and Vodafone.
3.
No Treaty Abuse or Sham Arrangement
Rejecting the Revenue’s “conduit company” argument, the Court noted:
- long-term holding of investments (over a decade),
- audited financials in Mauritius,
- regulatory oversight,
- employees and office premises,
- pooled global investor structure.
These factors demonstrated real commercial substance, not tax evasion.
4. GAAR Does Not Apply to Pre-2017 Investments
The Court ruled that:
- GAAR operates prospectively
- Investments made prior to 01.04.2017 are fully protected
- Rule 10U cannot be used to dilute treaty-based grandfathering
The Revenue’s attempt to apply GAAR to a grandfathered transaction was held to be legally untenable.
5. DTAA Overrides Domestic Indirect Transfer Rules
While Indian law taxes indirect transfers under Section 9(1), the Court clarified:
Where a DTAA provides more beneficial treatment, Section 90(2) mandates treaty override.
Domestic “look-through” provisions cannot nullify treaty protections.
Why This Judgment Matters for Investors
🔹 Certainty for Foreign Capital
Reinforces India’s commitment to treaty-based taxation and investor confidence.
🔹 Strong Protection for PE & VC Funds
Validates common Mauritius fund structures used by global investors.
🔹 Limits Aggressive Tax Recharacterisation
Curtails retrospective or creative application of GAAR and substance doctrines.
🔹 Aligns with Global Tax Norms
Upholds OECD principles on treaty interpretation and legal certainty.
Key Takeaways (SEO Highlights)
- Tiger Global Flipkart tax case Supreme Court
- India Mauritius DTAA capital gains exemption
- GAAR not applicable to pre-2017 investments
- Tax Residency Certificate conclusive proof
- Indirect transfer taxation India Supreme Court
Conclusion
The Supreme Court’s ruling in the Tiger Global case is a watershed moment in Indian international tax jurisprudence. By upholding DTAA protections, rejecting speculative treaty abuse claims, and reaffirming grandfathering, the Court has sent a strong signal that India remains a rule-of-law jurisdiction for global investors.
For foreign funds and cross-border dealmakers, this judgment restores predictability—and confidence—in India’s tax regime.