Tiger Global Loses Flipkart Tax Battle

In a significant ruling, the Supreme Court has denied tax benefits to global investor Tiger Global concerning its 2018 exit from Flipkart. The apex court determined that the India-Mauritius Double Taxation Avoidance Agreement (DTAA) does not apply to the transaction, potentially leading to a tax demand of approximately ₹14,500 crore against the firm. This judgment overturns earlier relief granted to Tiger Global by the Delhi High Court.

The Supreme Court concluded that Tiger Global's use of the Mauritius route for its Flipkart stake sale to Walmart constituted "treaty shopping" and tax avoidance. The court asserted India's sovereign right to tax income within its borders, underscoring the importance of protecting domestic tax revenues. This decision provides substantial judicial backing for the Income Tax department in challenging similar tax planning structures.

This verdict has sent ripples through the private equity and venture capital sectors, raising concerns for numerous foreign investors who have utilized Mauritius-based entities for Indian investments. Experts anticipate a surge in tax demands for existing and future exits, potentially reshaping investment strategies and steering funds away from Mauritius-centric structures. The ruling marks a turning point in India's efforts against tax avoidance.