In a landmark ruling with far-reaching implications for foreign investors, the Supreme Court has held that Tiger Global’s $1.6-billion stake sale in Flipkart to Walmart is taxable in India, terming the transaction an “impermissible tax avoidance arrangement.”
The case stemmed from Tiger Global’s 2018 sale of its Flipkart stake as part of Walmart’s $16-billion acquisition of the e-commerce giant. Tiger Global had routed the investment through its Mauritius-based entities and claimed tax exemption under the India–Mauritius tax treaty. Indian tax authorities challenged this, arguing the Mauritius entities were merely conduits for the US parent company, used to avoid taxes.
Delivering the judgment, Justice R. Mahadevan ruled that the structure was designed to avoid tax and therefore could not claim treaty benefits. The court overturned an earlier Delhi High Court decision that had ruled in Tiger Global’s favour.
“This judgment is being watched globally, not just in India,” said N. Venkataraman, the government’s top lawyer, underscoring its significance for future cross-border transactions.
The ruling is expected to set a strong precedent on how India applies tax principles to international deals and the use of bilateral tax treaties. Tiger Global has maintained that its subsidiaries were not shell entities, but did not immediately respond to requests for comment following the verdict. Walmart, which competes with Amazon in India’s booming e-commerce market, has also not commented on the case.
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