Tiger Global liable to pay tax on 2018 Flipkart deal: Supreme Court
In a setback against Tiger Global Management Llc, the Supreme Court on Thursday upheld the income tax department’s claim that capital gains arising from the US-based investor’s $1.6 billion exit from Flipkart in 2018 were taxable in India.
The high court set aside the Delhi high court’s August 2024 order rejecting the tax demand and ruling in favor of Tiger Global.
The decision, announced by a bench comprising Justices JB Pardiwala and R. Mahadevan, will potentially change the way India taxes foreign investors and interprets its flagship tax treaty, the India-Mauritius Double Taxation Avoidance Agreement (DTAA).
At the heart of the dispute was Tiger Global’s $1.6 billion exit from Flipkart in 2018, when Walmart Inc. acquired a majority stake in the Indian e-commerce company in one of the largest cross-border deals in India.
The question was whether Tiger Global could claim capital gains tax exemption under the India-Mauritius DTAA for the sale or whether the Mauritius companies were merely “shell” entities controlled by the US, meaning the deal was misused and the profits should be taxed in India.
case file
The story goes back more than a decade. Tiger Global invested in Flipkart in its early years.
Like many foreign investors of the time, global venture capital and private equity firms directed their investments to Mauritius. This was common because the India-Mauritius tax treaty signed in 1983 allowed companies based in Mauritius to sell shares of Indian companies without paying capital gains tax in India.
Mauritius eventually became India’s largest source of foreign direct investment (FDI), accounting for around 25% of total inflows. According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), investments directed from Mauritius between April 2000 and September 2024 exceeded $177 billion; of this figure, $5.34 billion was realized in the first half of 2024-25.
Tiger Global has established several companies in Mauritius, namely Tiger Global International II, III and IV Holdings. These companies raised money from hundreds of investors around the world and invested in Flipkart’s Singapore holding company between 2011 and 2015. At the time, Flipkart was owned by a Singaporean parent company, a structure that many Indian startups use to attract foreign money.
In 2016, India amended the treaty to stop tax evasion. It has been decided that shares purchased on or after April 1, 2017 will be taxed in India. However, old investments were “grandfathered”, meaning they could still benefit from tax exemption, subject to certain conditions.
Tiger Global’s investments were made before 2017, so they enjoyed protection on paper.
Walmart sold some of its Tiger Global stake in 2018 when it agreed to buy nearly 77% of Flipkart for about $16 billion. In total, companies in Mauritius received approximately $1.6 billion.
Before the deal was completed, these companies sought permission from Indian tax authorities to receive the money without tax deduction. The tax authority rejected this proposal, saying that Mauritian firms were merely manipulation tools and that the real control and decision-making authority lay with the United States. According to the ministry, the structure was created solely to avoid Indian tax.
Tiger Global then went to the Authority for Advance Rulings (AAR). In 2020, the AAR held that Tiger Global was not owned by an Indian company but sold shares in Flipkart’s Singapore holding company and that the India-Mauritius tax treaty was not intended to provide exemption for the sale of shares in a foreign company even if the company’s business was primarily conducted in India.
Tiger Global challenged this before the Delhi high court.
In August 2024, the high court ruled in Tiger Global’s favor, saying that using a tax-friendly country does not automatically amount to tax evasion. It ruled that Tiger’s Mauritius companies were real, that they had commercial activities and long-term investments, and that the tax office could not dismiss the case without a full review.
The tax office then appealed to the Supreme Court, which lifted the high court decision in January 2025.
Tiger Global argued before the high court that companies in Mauritius are bona fide residents of that country, supported by official Tax Residency Certificates, that their investments were made before 2017 and are therefore protected, and that real decisions are taken by boards in Mauritius.
The tax office countered this, saying the Mauritius regulation was just a cover, that the residence certificate was not a “magic pass” and that the real “brains and brains” of the business were in the US.
