In a major turn of events affecting international investment and cross-border deal structures, India’s Supreme Court has ruled that Tiger Global must pay taxes on the capital gains arising from its $1.6 billion sale of a Flipkart stake to Walmart in 2018, overturning earlier legal decisions that had exempted the transaction from tax. The ruling, delivered on January 15, 2026, marks a significant shift in how India will apply and interpret international tax treaties in future cross-border investments—a development being closely watched by global investors and multinational corporations.
At the heart of the dispute was Tiger Global’s use of a Mauritius-based holding structure to sell its Flipkart shares as part of Walmart’s acquisition of the Indian e-commerce giant. For years, Tiger Global had claimed exemption from capital gains tax in India under the India–Mauritius Double Taxation Avoidance Agreement (DTAA), arguing that its Mauritius entities provided treaty protection that exempted the profit from Indian taxation. Indian tax authorities, however, contended that the structure was simply a tax-avoidance arrangement with little commercial substance beyond the tax benefits claimed.
In delivering its judgment, the Supreme Court set aside a previous ruling by the Delhi High Court that had favored Tiger Global, holding instead that the transaction was structured in a way that amounted to impermissible tax avoidance. The bench, led by Justices J.B. Pardiwala and R. Mahadevan, agreed with the Indian tax department that the Mauritius entities were not standalone, substantive commercial businesses but rather conduits for shifting profits out of India without paying appropriate taxes. As a result, the apex court confirmed that capital gains from the stake sale are subject to Indian tax law and cannot automatically benefit from treaty exemptions.
The ruling also affirmed the government’s position that holding a tax residency certificate alone does not guarantee treaty benefits, especially if the arrangement behind a transaction is designed primarily to secure tax advantages. By emphasizing the principle that the substance and real economic control of the investment must outweigh mere form, the judgment is seen as reinforcing India’s sovereign right to impose taxes on income arising from activities that draw their value from assets located within its borders.
For Tiger Global, this judgment represents a significant legal and financial setback. The firm had been involved in the long-running litigation for several years, with the dispute moving through various levels of the Indian judicial system since it first emerged. With the Supreme Court’s decision now final, the investment firm could face a substantial tax liability—estimated to include not only the capital gains tax owed but also interest and potential penalties resulting from the prolonged legal battle.
Beyond Tiger Global itself, the ruling is expected to have broad implications for private equity funds, hedge funds, and other foreign investors that rely on treaty structures to plan their exits from Indian assets. Legal experts and tax advisors suggest that the Supreme Court’s emphasis on anti-avoidance principles is likely to prompt many investors to rethink how they structure cross-border transactions involving India. The focus on commercial substance and the rejection of “treaty shopping” could influence both future deals and retrospective tax assessments.
The decision also underscores India’s evolving approach to international tax policy. Over the past decade, the country has taken steps to tighten its treaties and apply general anti-avoidance rules more robustly, aiming to protect its tax base while still encouraging genuine foreign investment. By clarifying that treaty benefits cannot be assumed simply because of an entity’s registration in a treaty jurisdiction, the Supreme Court has sent a clear message about the country’s willingness to scrutinize offshore deal structures more closely.
As the dust settles on this landmark ruling, its full impact will unfold in how legal practitioners, corporate finance teams, and global investors approach tax planning and deal structuring in India. For now, the judgment stands as a watershed moment in international tax jurisprudence, reshaping expectations and setting a precedent that could influence deals not only in India but in other jurisdictions facing similar challenges with treaty misuse and cross-border taxation
