Quick Summary
The Supreme Court of India, in a major ruling with far-reaching implications for foreign investors and private equity funds, has ruled against Tiger Global International III Holdings, holding that the investment firm is not entitled to capital gains tax exemption on the sale of its stake in Flipkart
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FAQ :
The case concerned whether Tiger Global was entitled to capital gains tax exemption on its sale of Flipkart shares, claiming benefits under the India-Mauritius Double Taxation Avoidance Agreement.
The Supreme Court ruled that treaty benefits cannot be claimed automatically and must be denied if the transaction lacks commercial substance or was structured mainly to avoid tax.
No, the Supreme Court stated that a TRC from Mauritius is not conclusive proof of entitlement to treaty exemption.
The judgment will likely influence how foreign investors structure their India-focused investments and exits, particularly those using treaty jurisdictions, and may lead to a reassessment of holding structures and reliance on treaty exemptions.
The ruling reinforces the importance of 'substance over form', states that artificial structures for treaty shopping will not be protected, and reaffirms India's right to tax income from Indian assets.
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