Indian Supreme Court rules against Tiger Global’s Mauritius entities, denying tax treaty exemption on Flipkart exit.
In a landmark judgment in early 2026, the Supreme Court of India has ruled that Mauritius-based entities of Tiger Global are liable to pay capital gains tax in India on the sale of their stake in e-commerce company Flipkart. The Court denied the companies the benefit of the India–Mauritius Double Taxation Avoidance Agreement (DTAA) exemption they had sought.
What happened?
Tiger Global, a US-based investment firm, invested in Flipkart through its Mauritius entities (Tiger Global International II, III, and IV Holdings). These entities sold shares in Flipkart’s Singapore holding company in 2018 as part of the Walmart acquisition of Flipkart.
The firm argued that the gains were exempt from Indian capital gains tax under the India–Mauritius DTAA, relying on tax residency certificates issued in Mauritius and a grandfathering clause in the treaty protecting pre-April 2017 investments.
The Indian tax authorities and the Supreme Court found that the Mauritius entities lacked commercial substance, that the structure appeared designed to secure unintended tax benefits, and that a tax residency certificate alone does not conclusively prove genuine residency eligible for treaty protection. On that basis, the Court overturned a previous Delhi High Court order that had granted treaty benefits and held that Tiger Global is liable for tax in India on the gains. Although in many ways there is nothing new with treaty relief being disallowed where “treaty shopping” is suspected, this is very big news for Mauritius, as it’s been a common holding company juridisction for Indian investments, largely due to the beneficial CGT exemption in the grandfathered tax treaties.
Key Legal Principles
- Substance over paper: The Court emphasised that economic substance and genuine operations in the treaty jurisdiction matter more than formal documentation like tax residency certificates. Again, nothing new here in theory, but a big impact on Mauritian / Indian investments.
- GAAR can override DTA claims: India’s General Anti-Avoidance Rules (GAAR) were applied because the structure primarily sought tax benefits. Treaty protection can be withheld if a transaction is deemed an impermissible avoidance arrangement.
- Grandfathering does not guarantee immunity: Although the India–Mauritius treaty has a clause that grandfathers pre-2017 investments, the Court confirmed that treaty benefits still require real substance and cannot be automatically claimed.
Why the case matters
- Investors may rethink treaty routes: The ruling is expected to change how foreign funds and private equity investors structure India-related deals, especially involving Mauritius or similar jurisdictions.
- Tax planning scrutiny increases: Authorities now have greater scope to examine whether entities genuinely qualify for treaty benefits or are mainly conduits.
- Potential impact on past deals: Earlier exits using the Mauritius route may face re-evaluation of tax positions if they lack commercial substance.
What’s next?
The Tiger Global case marks a shift toward stricter treaty-benefit rules in India. For investors and advisors, this decision underscores the need for stronger economic presence in treaty jurisdictions, careful assessment of GAAR exposure, and ongoing monitoring of international tax jurisprudence.
If your investment structures rely on treaty benefits, this ruling is a timely reminder to reassess substance, governance and GAAR exposure. Our team can support you in reviewing existing arrangements, strengthening commercial presence where required, and navigating evolving treaty interpretation across jurisdictions.
Get in touch for tailored guidance to ensure your cross-border investments remain robust, defensible and compliant in an increasingly substance-driven tax environment.
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