When Walmart acquired Flipkart in 2018 for $16 billion, it was one of the largest tech exits in India’s history. Among the biggest beneficiaries was Tiger Global, the US investment firm that had backed Flipkart since 2009, gradually building up more than $1.2 billion in exposure across multiple rounds.
As part of the Walmart transaction, Tiger Global sold a major portion of its stake for roughly $1.6 billion. The company executed this exit through Mauritius‑based entities—including Tiger Global International II, III and IV Holdings—which held shares in Flipkart’s Singapore parent. This structure was not unusual; through the 2000s and 2010s, Mauritius served as a gateway for billions in FDI into India because the India–Mauritius Double Tax Avoidance Agreement (DTAA) historically exempted capital gains on such sales.
Tiger Global argued that because its Mauritius entities acquired their Flipkart shares before April 1, 2017, they were protected under the treaty’s “grandfathering” clause. India amended the treaty in 2016 to allow taxation of capital gains on shares acquired on or after April 1, 2017, but investments made earlier could still claim exemption. Another amendment was made in 2024 to focus on tax avoidance and to incorporate BEPS standards which denies treaty benefits if it can be established that the main purpose of a transaction is directed at gaining tax advantages.
The firm also relied on Tax Residency Certificates (TRCs) from Mauritius to justify that the gains were not taxable in India. “While necessary, a TRC does not by itself establish treaty entitlement. Tax authorities may examine economic substance, control, and beneficial ownership,” says Himanshu Sinha, partner-tax practice, Trilegal.
However, India’s tax authorities saw it differently. They argued that Tiger Global’s Mauritius entities were “conduits” with no meaningful commercial activity and that real control sat with Tiger Global in the US—so the structure’s main purpose was to avoid Indian tax. In earlier proceedings, authorities pegged potential tax exposure at about Rs 14,500 crore.
The judgment itself doesn’t state a percentage. It makes the gain taxable under India’s capital‑gains regime. For listed equity shares, long‑term capital gains (LTCG) are taxed under Section 112A at a concessional rate (raised from 10 percent to 12.5 percent for transfers on/after July 23, 2024), over the statutory annual threshold, plus surcharge and cess.
“The Tiger Global case will impact all current and prior M&A deals where tax treaty benefits have been claimed. Private equity players and FPIs need to look at their investment structures and rethink returns. Tax litigation around tax treaty claims may increase and impact the tax insurance market,” says Gouri Puri, partner, Shardul Amarchand Mangaldas & Co.
The Supreme Court’s emphasis on substance over form means these offshore vehicles must now demonstrate real economic presence; paper entities will struggle to withstand scrutiny. In practical terms, this raises the cost of capital for India‑focused funds, complicates secondary sales, and may slow large exits that depend on treaty‑based tax neutrality.
“This judgement should be seen as the judicial view on the fact pattern of a specific transaction. As a principle, it affirms the governmental right to evaluate true substance—maintaining the investing climate in today’s world will however need maturity in the application of this right by the tax administration,” says Vivek Gupta, partner, Deloitte India.
For founders, this means a shift in dealmaking norms: Greater diligence on investor structure, more indemnity‑heavy term sheets, and tighter tax representations in secondary sales. Over the long term, the ruling nudges India’s ecosystem toward higher transparency and reduced treaty arbitrage, even if it introduces short‑term uncertainty in exit planning.
First Published: Jan 16, 2026, 16:55
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