Tiger Global tax case: How SC ruling reshapes India's tax treaty playbook
New Delhi, Jan 16, 2026
The Supreme Court's Tiger Global ruling strengthens India's ability to tax cross-border exits and probe treaty shopping, even when foreign investors hold valid tax residency certificates
In a closely watched judgment over a tax dispute involving a foreign investment firm, the Supreme Court on Thursday (January 15) gave a key judgment in a long-ongoing case involving Tiger Global, one of the most influential foreign investors in Indian startups. The issue was about the partial exit of Tiger Global from Flipkart in 2018 when Walmart bought the ecommerce firm in an approximately $16 billion deal.
Tiger Global had made capital gains of $1.6 billion after selling part of its Flipkart stake during the transaction. Subsequently, the Income Tax department had raised the demand that these gains were liable to tax in India. Tiger Global challenged this by asserting the protection of India’s tax treaty with Mauritius and presenting a Tax Residency Certificate (TRC) from the Mauritian authorities.
The dispute ultimately made its way to the Supreme Court of India, which overturned a 2024 Delhi High Court ruling, which had set aside the tax demand.
What exactly is the Tiger Global dispute about?
Tiger Global’s investment structure lies at the heart of the case because, like many foreign investors, the investment firm had routed its India investments through entities incorporated in Mauritius. Under the India-Mauritius Double Taxation Avoidance Agreement (DTAA), capital gains on the sale of shares have historically been taxed only in Mauritius, not in India.
Tiger Global argued that because its Mauritian entities held valid TRCs, India could not tax the Flipkart gains. The tax department, however, claimed that these entities were merely “conduit” companies with no real economic substance and that the effective control and decision-making lay elsewhere.
The Supreme Court agreed with the tax authorities that this question required detailed examination and that the presence of a Tax Residency Certificate (TRC) alone could not block such scrutiny.
What is a Tax Residency Certificate?
A Tax Residency Certificate is an official document issued by a country’s tax authority, which confirms that a company or individual is a tax resident of that said country for a specific period. In India, a TRC is required to claim benefits under a tax treaty.
Until now, TRCs were often treated as sufficient evidence for accessing treaty protections. Now, the Supreme Court has clarified that while a TRC remains necessary, it is not decisive, opening the door to a precedent that tax authorities can still investigate whether the entity claiming treaty benefits is genuine or merely a pass-through vehicle.
Therefore, what the SC has done is set the tone for a future where TRCs will continue to be used, but they will no longer be a shield against deeper tax enquiries if authorities suspect something fishy.
Why is the ruling considered important?
The SC’s ruling clarifies that a Tax Residency Certificate is no longer a conclusive proof that a foreign investor is entitled to treaty benefits. The court held that Indian tax authorities are permitted to look beyond formal paperwork and examine the “substance” of a transaction.
This strengthens the tax department’s ability to investigate alleged “treaty shopping”, where investors use intermediary jurisdictions primarily to reduce tax liability. Tax experts say that the judgment will lower the barrier for reopening or sustaining tax demands in cases involving layered offshore structures.
Meanwhile, for India’s tax system, the decision reinforces the principle that treaty benefits can be denied if an arrangement is found to be abusive, even when documentation appears to be in order.
What was the norm before this judgment?
For nearly two decades, routing investments through Mauritius was standard practice for foreign funds investing in Indian equities and startups. At its peak, Mauritius accounted for over 30 per cent of cumulative foreign direct investment into India, with major investment firms like the Blackstone Group, KKR & Co., and Sequoia Capital India, among others, reaping the benefits.
The TRCs played a pivotal role in this structure as the investors made regular submissions of these certificates to the revenue department with an implicit claim for capital gains exemptions or reduced tax rates under the relevant tax treaties. Indian tax authorities have always raised doubts about the proper use of treaties, but most judges have considered TRCs as the best proof of eligibility for treaty benefits, unless unambiguous evidence of fault was provided.
This ruling narrows that comfort zone. It signals that documentation alone may not suffice where tax authorities allege that an entity lacks commercial substance.
How big is Tiger Global in India?
Tiger Global has been one of the most aggressive investors in India’s technology sector over the past decade. Between 2013 and 2021, it backed dozens of Indian startups across ecommerce, fintech, logistics and consumer internet (B2C) firms.
Its India portfolio has included companies such as Flipkart, Razorpay, Dream11, Groww, Meesho, Nlusmart, Spinny, ShareChat, Gupshup, Infra.Market, Chargebee, among many others. Tiger Global, at its peak, was among the top foreign investors by deal volume in India’s rising startup ecosystem.
On the other hand, the Flipkart exit was also one of its largest and most visible liquidity events in the country.
By the end of 2025, the investment firm held stakes in around 20-30 active India portfolio firms, which are valued to be an estimated $2-4 billion. Also, its announcement of a $2.2 billion last year in a new fund signalled a cautious re-entry, but contrasts with the $12.7 billion raised in 2021.
What does this mean for other foreign investors?
The immediate implication of the SC verdict points towards increased scrutiny of offshore holding structures, where foreign investors using treaty jurisdictions will now need to demonstrate genuine economic substance, including where decisions are made, where management sits, and how capital is deployed.
Meanwhile, legal and tax consultants expect more thorough scrutiny during the process of mergers, acquisitions, and exits. Buyers and sellers would be paying more attention to the possible tax leakage, which may lead to the extension of deal timelines.
The ruling may also affect provisioning by funds that have already exited Indian investments using similar structures, as some past transactions could face renewed examination.
[The Business Standard]
