Verdict overturns earlier relief and sharpens India’s approach to treaty-based tax exemptions in cross-border deals
The Supreme Court on Thursday ruled that Tiger Global’s USD 1.6 billion sale of its stake in Flipkart as part of Walmart’s 2018 acquisition is subject to capital gains tax, delivering a judgment that could reshape how India applies international tax treaties.
The closely watched dispute centred on Tiger Global’s use of the India–Mauritius Double Taxation Avoidance Agreement (DTAA) to seek exemption from taxes on the transaction, a claim strongly opposed by Indian tax authorities. The ruling is expected to have far-reaching implications for multinational investors and the structuring of cross-border transactions.
According to a Reuters report, the apex court dismissed the US-based investment firm’s challenge and upheld the tax department’s decision to deny the exemption, agreeing that authorities were correct in taxing the gains arising from the deal.
The case traces its origins to Tiger Global’s sale of its Flipkart holdings to Walmart in 2018 for Rs 144.4 billion, or about USD 1.6 billion. The transaction formed part of Walmart’s USD 16 billion acquisition of the Indian ecommerce company.
Tiger Global had first approached the Income Tax Department in 2019, seeking exemption from capital gains tax under the India–Mauritius DTAA. The firm relied on Article 13(3A) of the treaty, which exempts Mauritian residents from Indian capital gains tax on shares acquired before 1 April 2017. Between 2011 and 2015, Tiger Global acquired shares in Flipkart Singapore, which held significant interests in Flipkart India, before selling them to Walmart in 2018.
In March 2020, the Authority for Advanced Rulings (AAR) rejected Tiger Global’s exemption plea, concluding that the transaction had been structured to avoid taxes and that the Mauritius-based entities involved acted merely as conduits. That ruling was overturned in August 2024, when the Delhi High Court ruled in favour of Tiger Global and granted tax exemption under the treaty.
However, in January 2025, the Supreme Court stayed the Delhi High Court’s decision after the AAR challenged the ruling, and issued a notice to Tiger Global. The apex court’s final verdict has now effectively restored the tax department’s position.
Tax officials had consistently argued that Tiger Global wrongly invoked the treaty, maintaining that the Mauritius-based entities lacked sufficient economic substance. Tiger Global denied the allegations, asserting that its investment structure was compliant with the law and permitted under the treaty.
With the Supreme Court siding with tax authorities, the decision is now being closely monitored by global investors, as it is likely to serve as a key precedent for treaty interpretation and influence how future cross-border investments into India are structured.
