{"id":31015,"date":"2026-01-23T00:54:26","date_gmt":"2026-01-22T19:24:26","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=31015"},"modified":"2026-01-23T16:33:52","modified_gmt":"2026-01-23T11:03:52","slug":"sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/","title":{"rendered":"SC: Tiger Global not Eligible for Mauritius Treaty Exemption on Flipkart Share Sale"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e29cafb50a5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e29cafb50a5\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#Supreme_Court_Tiger_Global_Not_Eligible_for_Mauritius_Treaty_Exemption_on_Flipkart_Share_Sale\" title=\"Supreme Court: Tiger Global Not Eligible for Mauritius Treaty Exemption on Flipkart Share Sale\">Supreme Court: Tiger Global Not Eligible for Mauritius Treaty Exemption on Flipkart Share Sale<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#What_is_background_of_Tiger_Global_case_on_the_exemption_on_Flipkart_Share_Sale\" title=\"What is background of Tiger Global case on the exemption on Flipkart Share Sale\">What is background of Tiger Global case on the exemption on Flipkart Share Sale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#Proceedings_before_the_Tax_Authorities\" title=\"Proceedings before the Tax Authorities: \">Proceedings before the Tax Authorities: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#High_Court_Proceedings\" title=\"High Court Proceedings: \">High Court Proceedings: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#What_the_Supreme_Court_Held\" title=\"What the Supreme Court Held\">What the Supreme Court Held<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#Key_Facts_Recap\" title=\"Key Facts Recap\">Key Facts Recap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#Implications_for_Foreign_Investors_on_Mauritius_Treaty_Exemption_on_Flipkart_Share_Sale\" title=\"Implications for Foreign Investors on Mauritius Treaty Exemption on Flipkart Share Sale\">Implications for Foreign Investors on Mauritius Treaty Exemption on Flipkart Share Sale<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/sc-tiger-global-not-eligible-for-mauritius-treaty-exemption-on-flipkart-share-sale\/#Why_This_Judgment_Matters\" title=\"Why This Judgment Matters : \">Why This Judgment Matters : <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-31017\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/tiger-.png\" alt=\"Global Not Eligible for Mauritius Treaty\" width=\"902\" height=\"580\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/tiger-.png 697w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/tiger--300x193.png 300w\" sizes=\"(max-width: 902px) 100vw, 902px\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Supreme_Court_Tiger_Global_Not_Eligible_for_Mauritius_Treaty_Exemption_on_Flipkart_Share_Sale\"><\/span><span style=\"color: #000080;\"><strong>Supreme Court: Tiger Global Not Eligible for Mauritius Treaty Exemption on Flipkart Share Sale<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"What_is_background_of_Tiger_Global_case_on_the_exemption_on_Flipkart_Share_Sale\"><\/span><span style=\"color: #000080;\"><strong>What is background of Tiger Global case on the exemption on Flipkart Share Sale<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tiger Global International II Holdings, Tiger Global International III Holdings, and Tiger Global International IV Holdings\u00b9 (collectively, <em>the taxpayer<\/em>) are private companies limited by shares, incorporated in Mauritius. The taxpayer held valid Tax Residency Certificates issued by the Mauritius Revenue Authority and was primarily set up to undertake investment activities with the objective of earning long-term capital appreciation and investment income. The taxpayer held a Category 1 Global Business Licence in Mauritius and was regulated by the Financial Services Commission of Mauritius.<\/p>\n<p>Investment Structure and Transaction: The taxpayer acquired shares in Flipkart Private Limited, Singapore (\u201cFlipkart Singapore\u201d) during the period 2011 to 2015. Flipkart Singapore derived substantial value from underlying assets located in India, including Flipkart India and other Indian group entities. In 2018, the taxpayer transferred its shareholding in Flipkart Singapore to Fit Holdings, a company incorporated in Luxembourg, as part of Walmart\u2019s acquisition of Flipkart.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Proceedings_before_the_Tax_Authorities\"><\/span><span style=\"color: #000080;\">Proceedings before the Tax Authorities: <\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Prior to the transfer, the taxpayer applied to the Indian tax authorities for a nil withholding tax certificate, which was denied. The taxpayer thereafter approached the Authority for Advance Rulings seeking a ruling on the taxability of capital gains in India under the India\u2013Mauritius Double Taxation Avoidance Agreement.<\/p>\n<p>Authority for Advance Rulings\u2019s Findings and Rejection: The Authority for Advance Rulings rejected the application at the threshold, holding that the transaction was prima facie designed for tax avoidance and therefore not fit for admission u\/s 245R(2) of the Income-tax Act, 1961\u00b2.<\/p>\n<p>In its order, the Authority for Advance Rulings observed that: The effective control and management of the taxpayer was not located in Mauritius, but in the United States; The sole director of the ultimate US holding company was a signatory to the Mauritius bank accounts and was the beneficial owner of the taxpayer; The board of directors in Mauritius were merely nominal and lacked independent decision-making authority; The taxpayer carried on no real commercial or economic activity in Mauritius and functioned as a conduit entity established to avail treaty benefits.\u00a0 On this basis, the AAR concluded that the structure lacked commercial substance and was set up primarily for tax avoidance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"High_Court_Proceedings\"><\/span><span style=\"color: #000080;\">High Court Proceedings: <\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The taxpayer challenged the Authority for Advance Rulings\u2019 rejection before the Delhi High Court. The Delhi High Court quashed the AAR\u2019s order, holding that The transaction was not designed for tax avoidance; and Capital gains arising from the transfer of shares acquired prior to 1 April 2017 were grandfathered under the India\u2013Mauritius Double Taxation Avoidance Agreement.<\/p>\n<p>Appeal before the Supreme Court: Aggrieved by the Delhi High Court\u2019s decision, the Revenue appealed to the Supreme Court. The Supreme Court examined whether the Authority for Advance Rulings was justified in rejecting the ruling application as not maintainable by prima facie treating the transaction\u2014namely, the sale of shares of a Singapore company substantially deriving value from Indian assets, by a Mauritius entity controlled by a US parent\u2014as an impermissible avoidance arrangement and consequently declining to inquire into the taxability of the resulting capital gains under the Income-tax Act, 1961, read with the applicable tax treaty provisions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_the_Supreme_Court_Held\"><\/span><span style=\"color: #000080;\"><strong>What the Supreme Court Held<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Supreme Court of India has ruled that Tiger Global\u2019s Mauritius entities are not entitled to capital gains tax exemption under the India\u2013Mauritius Double Taxation Avoidance Agreement on their 2018 sale of Flipkart Singapore shares.( Decision Dated on 15 January 2026 under the Case Civil Appeal Nos. 262\u2013264 of 2026, at New Delhi). The ruling decisively applies General Anti\u2011Avoidance Rules over treaty claims, reshaping the contours of international tax planning involving India. The Court held that:<\/p>\n<ul>\n<li><strong><span style=\"color: #000080;\">The arrangement was an <\/span><em><span style=\"color: #000080;\">impermissible avoidance arrangement :<\/span> <\/em><\/strong>Under India\u2019s General Anti\u2011Avoidance Rules (GAAR), the structure lacked commercial substance and was primarily set up to avoid Indian tax. Thus, Tiger Global cannot use grandfathering provisions or treaty protections.<\/li>\n<li><span style=\"color: #000080;\"><strong>TRC (Tax Residency Certificate) is <em>not conclusive <\/em><\/strong><\/span><em><span style=\"color: #000080;\">:<\/span> <\/em>A TRC is only a threshold requirement, not a final proof of tax residency. Tax authorities may examine actual commercial substance, control and management, purpose of the arrangement, real economic activity in Mauritius. In Tiger Global\u2019s case, the Court agreed that commercial substance was insufficient.<\/li>\n<li><span style=\"color: #000080;\"><strong>Capital gains were taxable in India under domestic law : <\/strong><\/span>Because SCO\u2019s shares derived substantial value from assets located in India, Explanation 5 to section 9(1)(i) of the Income Tax Act applied. Thus, the gains are deemed to accrue in India.<\/li>\n<li><span style=\"color: #000080;\"><strong>General Anti\u2011Avoidance Rules overrides treaty benefits : <\/strong><\/span>Even though Mauritius investments prior to 1 April 2017 are \u201cgrandfathered,\u201d this protection is not absolute. If General Anti\u2011Avoidance Rules is invoked then treaty benefit denied.<\/li>\n<li><strong><span style=\"color: #000080;\">Authority for Advance Rulings was right to reject Tiger Global\u2019s application<\/span> : <\/strong>AAR is barred from admitting cases where a transaction appears prima facie tax\u2011avoidance\u2011driven (Section 245R(2)). The Supreme Court upheld AAR\u2019s rejection.<\/li>\n<li><strong><span style=\"color: #000080;\">India\u2019s tax sovereignty reaffirmed :<\/span> <\/strong>The Court underlined that nations retain an inherent right to tax income arising from their territory and to counter aggressive tax planning.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Key_Facts_Recap\"><\/span><span style=\"color: #000080;\"><strong>Key Facts Recap<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Tiger Global Mauritius entities held Category 1 GBL + Tax Residency Certificate.<\/li>\n<li>Shares sold: Flipkart Singapore (which owned substantial Indian operations).<\/li>\n<li>Buyer: A Luxembourg entity, as part of Walmart\u2019s 2018 Flipkart acquisition.<\/li>\n<li>Authority for Advance Rulings rejected ruling: High Court allowed treaty benefit then Supreme Court overturned.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Implications_for_Foreign_Investors_on_Mauritius_Treaty_Exemption_on_Flipkart_Share_Sale\"><\/span><span style=\"color: #000080;\"><strong>Implications for Foreign Investors on Mauritius Treaty Exemption on Flipkart Share Sale<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>TRC alone is insufficient &amp; Expect scrutiny of Board control &amp; decision-making, Funding flows, Economic activity, Exit planning &amp; timing<\/li>\n<li>Tax-friendly holding jurisdictions face higher risk: Shell or conduit entities will not survive General Anti\u2011Avoidance Rules review. Holding\u2011company structures routed through tax\u2011friendly jurisdictions face higher risk.<\/li>\n<li>India-value-derived share sales are taxable: Unless backed by strong commercial substance., so Any India\u2011value\u2011derived share sale is taxable unless strong commercial substance exists<\/li>\n<li>General Anti\u2011Avoidance Rules applies even to pre-2017 investments: Grandfathering is conditional, not guaranteed. General Anti\u2011Avoidance Rules can neutralize treaty benefits even for pre\u20112017 investments<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Why_This_Judgment_Matters\"><\/span><span style=\"color: #000080;\"><strong>Why This Judgment Matters : <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Supreme Court\u2019s ruling in <em>Tiger Global<\/em> underscores India\u2019s sovereign right to tax income arising from India-linked value. Cross-border transactions involving Indian assets or businesses are therefore likely to face heightened scrutiny, with tax authorities focusing more sharply on the commercial rationale underlying such arrangements.<\/p>\n<p>Multinational groups may need to reassess their holding and transaction structures where treaty benefits are sought across income streams\u2014including, but not limited to, direct or indirect transfers, dividends, interest, and other returns. Greater emphasis will be placed on demonstrating commercial substances, supported by robust contemporaneous documentation covering control, decision-making, funding, and exit planning.<\/p>\n<p>At the same time, the decision is fact-specific, with the Court\u2019s observations closely tied to the factual matrix before it. That said, the judgment lays down an important and binding principle: a Tax Residency Certificate is not conclusive and does not preclude an independent inquiry into treaty eligibility. Tax authorities may examine the surrounding substance of the arrangement, including the commercial justification for the chosen structure (such as SPV formations) and the manner of exit.<\/p>\n<p>Looking ahead, it will be important to monitor how this ruling is applied in the post-MLI environment. In the context of the India\u2013Mauritius tax treaty, the protocol incorporating the principal purpose test has not yet come into effect. Further, CBDT Circular No. 1\/2025 dated 21 January 2025 clarifies that the grandfathering provisions under the Mauritius, Singapore, and Cyprus treaties remain outside the scope of the principal purpose test.<\/p>\n<p>However, notwithstanding the absence of Principal Purpose Test applicability, legacy structures may continue to face scrutiny under General Anti\u2011Avoidance Rules and judicial anti-avoidance principles, as reaffirmed by the Supreme Court in this case.<\/p>\n<p>This is one of the most consequential General Anti\u2011Avoidance Rules rulings since its introduction. The Court has clearly laid down that If commercial substance is weak, treaty benefits will not stand\u2014even if the entity has a Tax Residency Certificate. It signals a stronger stance against round\u2011tripping, treaty abuse, and resident\u2011shell structures. And the Supreme Court has sent a clear message: Treaty benefits cannot survive where commercial substance is weak tax residency certificate notwithstanding.<\/p>\n<p><a href=\"https:\/\/api.sci.gov.in\/supremecourt\/2025\/1251\/1251_2025_7_1501_67552_Judgement_15-Jan-2026.pdf\">Complete Case Link\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court: Tiger Global Not Eligible for Mauritius Treaty Exemption on Flipkart Share Sale What is background of Tiger Global case on the exemption on Flipkart Share Sale Tiger Global International II Holdings, Tiger Global International III Holdings, and Tiger Global International IV Holdings\u00b9 (collectively, the taxpayer) are private companies limited by shares, incorporated in &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[150],"tags":[10413],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31015"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=31015"}],"version-history":[{"count":2,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31015\/revisions"}],"predecessor-version":[{"id":31018,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/31015\/revisions\/31018"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=31015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=31015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=31015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}