India’s Supreme Court has ruled that Tiger Global must pay capital gains tax on its 2018 Flipkart stake sale, deeming the Mauritius structure an avoidance scheme under GAAR.
New Delhi: India’s Supreme Court on Thursday ruled against Tiger Global in a landmark India Mauritius tax ruling, holding that the US fund’s Mauritius entities were conduits for tax avoidance in the $1.6 billion sale of Flipkart shares to Walmart. The decision, delivered by Justices R Mahadevan and JB Pardiwala, applies GAAR to override DTAA benefits, taxing gains in India.
The India Mauritius tax ruling stems from Tiger Global’s 2018 exit from Flipkart, where its Mauritius-based holdings—Tiger Global International II, III, and IV—sold shares in Singapore-registered Flipkart Private Limited to Luxembourg’s Fit Holdings SARL for INR 131 billion. The court found the structure lacked substance, with control residing in the US, making it ineligible for capital gains exemption under Article 13(4) of the India-Mauritius DTAA.
This India Mauritius tax ruling impacts foreign portfolio investors using similar routes, potentially exposing pre-2017 investments to scrutiny if exits occur post-April 2017. In South Asia, where cross-border investments fuel growth in sectors like e-commerce, the verdict signals tighter tax enforcement, affecting funds routing through Mauritius into India and neighbouring markets.
Tiger Global Tax Case Background
Tiger Global invested in Flipkart between 2011 and 2015 via Mauritius entities, acquiring shares before the 2017 DTAA amendments. The 2016 protocol shifted capital gains taxation to source-based for shares acquired after 1 April 2017, but grandfathered earlier holdings. However, the Supreme Court held that GAAR, effective from 2017, applies to benefits obtained post that date, regardless of investment timing.
In the Tiger Global tax case, the Authority for Advance Rulings in 2020 rejected the fund’s application for no-withholding certificate, citing prima facie avoidance. The Delhi High Court overturned this in August 2024, upholding TRC sufficiency for treaty benefits. The apex court reversed that, stating TRC is necessary but not conclusive if the entity is a “see-through” front.
Quotes from the judgment: “The assessees were only see-through entities to avail the benefits of the DTAA.” The court noted minimal operations in Mauritius, with decisions made in New York, and no commercial rationale beyond tax savings.
Flipkart Mauritius Tax Implications
The Flipkart Mauritius tax dispute centres on indirect transfers. Flipkart Singapore derived substantial value from Indian assets, triggering Section 9(1)(i) of the Income Tax Act for taxation in India. Tiger Global argued grandfathering protected the gains, but the court applied GAAR India Mauritius provisions, finding the arrangement impermissible.
Under GAAR India Mauritius rules in Chapter X-A, arrangements lacking commercial substance or aimed at tax benefits are taxable. The judgment clarifies that post-2017 exits from grandfathered investments can still attract GAAR if abusive. This affects the Mauritius route, historically used for 34% of FDI into India between 2000 and 2022, per government data.
Experts note the ruling strengthens India’s stance against treaty shopping. “The big takeaways are dilution of tax residency certificate, use of general anti-avoidance rule, and a key landmark in the evolution of India’s tax treaty jurisprudence,” said Gouri Puri, partner at Shardul Amarchand Mangaldas & Co.
In the Flipkart Mauritius tax case, the court directed the assessing officer to complete AY 2019-20 proceedings, potentially leading to a demand of INR 967 crore plus interest. Tiger Global may seek review, but success rates are low.
GAAR India Mauritius Application
GAAR India Mauritius overrides DTAA where abuse is evident. The Supreme Court examined board minutes, funding flows, and operations, concluding the Mauritius entities were US-controlled shells. “If a Mauritius-based entity is found to be a conduit or front without real economic substance, treaty benefits can be denied,” the judgment states.
This aligns with global anti-avoidance trends under BEPS but challenges pre-2017 structures. For South Asian investors, it raises risks in similar setups, as Mauritius remains a hub for regional funds. The ruling may deter treaty abuse but could chill legitimate investments amid India’s push for FDI.
Data from the judgment: Tiger Global’s Mauritius units paid minimal taxes—rates of 6.05%, 6.92%, and 8.47%—contrasting with potential 20% long-term capital gains in India. The court dismissed arguments that GAAR cannot apply retrospectively, focusing on when benefits accrue.
Background of India Mauritius Tax Ruling
The India-Mauritius DTAA, signed in 1982, exempted capital gains in Mauritius, leading to the “Mauritius Route” for tax-efficient investments. Post-Vodafone, India introduced indirect transfer taxes in 2012 and GAAR in 2017. The 2016 protocol ended exemptions for new investments but protected old ones. The Tiger Global tax case tests these limits, with the court prioritising substance over form.
What’s Next
The India Mauritius tax ruling sets precedent for cases like Blackstone’s Singapore dispute, currently before the Supreme Court. Tax authorities may probe other Mauritius-routed exits, prompting funds to restructure. India aims to boost FDI to $100 billion annually, but clarity on treaty applications is key.
This India Mauritius tax ruling underscores the need for robust substance in offshore structures to withstand GAAR scrutiny.
Published in SouthAsianDesk, January 17th, 2026
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