ThePrint ThePrintPod: How SC’s Tiger Global-Flipkart ruling on tax treaties sets crucial precedent
Jan 16, 2026
The Supreme Court ruled that Tiger Global's capital gains from its Flipkart exit are taxable in India, despite the Mauritius tax treaty. The court emphasized that offshore structures need real commercial substance to benefit from treaties. It explained how India's General Anti-Avoidance Rule (GAAR) can override treaty protections. The ruling affects foreign investors, private equity, and cross-border deals, delegitimizing reliance on Tax Residency Certificates. The implications of this decision on global investment strategies remain significant.
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Treaty Protection Is Not Automatic
- The Supreme Court held that treaty protection is not automatic when an investment vehicle lacks commercial substance.
- Courts can look through shell entities and tax offshore transactions tied to Indian assets.
GAAR Can Trump Tax Treaties
- GAAR can override treaty benefits when an arrangement is primarily created for tax avoidance.
- Parliament expressly made tax treaties subject to GAAR through section 92A of the Income Tax Act.
Reassess Offshore Structures Now
- Reassess offshore investment structures for genuine commercial substance and control.
- Expect more tax litigation and renewed scrutiny of PE funds, FPIs, and cross-border M&A deals.