End of Treaty Shopping? SC Ruling on Tiger Global (Investment in Flipkart)

Recently, the Supreme Court passed judgement in Tiger Global Holdings. The matter under consideration: Whether capital gains arising from indirect transfer of Indian assets through offshore entities can be taxed. The Supreme Court ruled that the benefits of tax treaty can be denied if transactions are designed for tax avoidance. This judgement has focused on substance over form in its verdict.

Background of the Case:

Tiger Global is a private company incorporated in Mauritius for the purpose of undertaking long-term investment activities. The Company acquired shares of Flipkart Private Ltd, a Singapore-based company between October 2011 and June 2014. Flipkart Singapore derived its value substantially from assets located in India. In 2018, Walmart Inc acquired Flipkart and as part of this global acquisition, Tiger Global (Mauritius) sold its shares to a Walmart entity in Luxembourg in a deal exceeding billions of dollars. Since Flipkart Singapore’s assets are based in India, any such transfer would be an indirect transfer of Indian assets. The Company approached the Advance Ruling Authority seeking a nil withholding certificate so that Walmart Luxembourg can pay the full amount without deducting taxes at source.

Analysis of the case:

• Shares of Flipkart Singapore are deemed to be situated in India since they derive significant value from assets located in India.

• Tiger Global (Mauritius) sold Flipkart Singapore shares to Walmart (Luxembourg). Considered indirect transfer of assets by Indian tax authorities.

• Transfer of shares attracts capital gains tax, in this case long term capital gains.

• The Company invoked the “grandfathering” clause in the Treaty - all investments before April 2017 were exempt from capital gains tax forever.

• The Company sought a nil-withholding certificate.

• The Tax Authorities countered that withholding tax would be between 6.05% to 8.47% on gross sale consideration of Rs 14500 crore.

• The Tax Authorities claimed that the “head and brain” of Tiger Global was in the US and not in Mauritius - thereby the company was a mere shell designed for tax avoidance.

• The Supreme Court ruled that possession of a Tax Residency Certificate was not sufficient evidence for not being a shell company.

• The Court noted that “substance over form” matters and it was evident that the Mauritius entity was a “see-through” entity designed solely for tax benefits.

• The Court also ruled that the power to levy tax is an inherent sovereign function that nations must protect from aggressive tax planning by MNCs.

My Take: The "Mauritius Route" is a preferred structure for foreign investment due to beneficial DTAA provisions. Recent trends suggest that Courts are moving towards “substance over form” and enforcing General Anti Avoidance Rules. MNCs need to re-examine their global structures. Shell companies must be removed or they must be given powers to become “head and brain” of their operations. Because it looks like the days of indiscriminate treaty shopping are over.

This article is part of An Accountant Writes, Vol 1, Issue 2 — February 2026. Read the full issue