Tiger Global International II Holdings, Tiger Global International III Holdings, and Tiger Global International IV Holdings, which were incorporated under the laws of Mauritius, held shares in Flipkart Private Ltd., a company incorporated under the laws of Singapore.
The stakes were sold as a part of broader transactions related to Walmart’s USD 16 billion acquisition of Flipkart. Tiger Global stake sale was for a gross consideration of about USD 2 billion, as per court filings.
In 2016, India and Mauritius signed the Protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains. It provided for taxation of capital gains arising from the alienation of shares acquired on or after 01.04.2017 in a company resident in India. It would be on a source basis with effect from the financial year 2017-18.
At the same time, investments made before 01.04.2017 were grandfathered and not subject to capital gains tax in India.
Tiger Global, in its argument, said that the transaction is exempt from taxes under the treaty, while the Indian Tax Department pointed out it is designed for avoidance of income tax.
“The Revenue has proved that the transactions in the instant case are impermissible tax-avoidance arrangements,” the Supreme Court said.
“One has to now understand and appreciate what is tax sovereignty and how important it is to our Nation in an era which is fraught with trade and tariff wars, building and shielding one’s own economy from any international economic disorder or disaster and so on. The stability of a Nation is slowly getting determined and recognised based on the strength and independence of a Nation’s tax sovereignty,” it said.
“It is a fundamental rule of international taxation that every nation has a sovereign right to impose tax on the global income of its residents and on income that accrues or arises within its territorial limits. These twin rights are referred to as residence-based or source-based taxation,” the apex court said.
“Taxing an income arising out of its own country is an inherent Sovereign right to that country. Any application of filters or diffusers to this is a direct attack or threat to its sovereignty which can affect a nation’s long-term interest,” the verdict said.
The Supreme Court set aside a order of Delhi High Court in the case.
“The ruling has serious implications for private equity funds, hedge funds and Foreign Portfolio Investors (FPIs) using Mauritius and Singapore -based structures, including for pre-2017 investments. While it does not automatically reopen closed cases, it significantly strengthens the tax department’s hand in reassessment proceedings where permitted by law,” Amit Baid, Head to Tax at law firm BTG Advaya, said.
Full text of the judgement: https://api.sci.gov.in/supremecourt/2025/1251/1251_2025_7_1501_67552_Judgement_15-Jan-2026.pdf