The ruling could reshape cross-border deal planning by limiting treaty-based tax avoidance strategies and raising scrutiny of foreign investment routes into India. (BizTrendWire Insight)
Source: Reuters (via feed)
India’s Supreme Court on Thursday ruled that Tiger Global must pay tax on gains from its 2018 sale of Flipkart shares. The judgment challenged the use of Mauritius investment routes long favored for tax benefits.
The case involved Tiger Global’s $1.6 billion sale of Flipkart shares to Walmart. The court found the deal used Mauritius-based conduit firms to claim treaty benefits.
Over decades, foreign investors invested about $180 billion into India via Mauritius because of tax advantages under the India-Mauritius treaty.
Even though the treaty was revised in 2017 to end exemptions for new investments, earlier investments were protected by a grandfathering clause. The court’s ruling effectively weakened that protection.
Legal experts said the decision gives Indian authorities broader powers to apply anti-avoidance rules. This could allow tax officials to reject treaty benefits for deals that lack commercial substance.
Some foreign investors have voiced concern about retrospective scrutiny of past deals and greater uncertainty in India’s tax environment.
India remains one of the world’s fastest-growing economies, but tax clarity has been a long-standing issue for global capital.
