Flipkart stake sale taxable in India, SC rules
16 Jan 2026

The Supreme Court of India has ruled that capital gains from the 2018 sale of a stake in Flipkart by Mauritius-based Tiger Global International II, III, and IV Holdings are taxable in India.

The decision comes as a major win for Indian tax authorities, who now expect to collect around ₹14,500 crore from the transaction.

The ruling also paves the way for further scrutiny of similar cases that could yield even more revenue, potentially over ₹20,000 crore.

Supreme Court's ruling and its implications
Legal impact

The Supreme Court overturned a Delhi High Court ruling in favor of Tiger Global International.

It found that the transactions were "impermissible tax-avoidance arrangements" and do not qualify as lawful.

Tax experts have termed this a "landmark ruling," allowing Indian tax authorities to deny bilateral treaty benefits to foreign entities using layered structures or shell companies for tax evasion on India-based transactions.

A shift in tax treaty interpretation
Expert opinions

Amit Maheshwari, Managing Partner at AKM Global, said the ruling has major implications for private equity, venture capital, and offshore investment structures.

He added that it marks the end of automatic treaty benefit claims based solely on tax residency certificates (TRCs).

Maheshwari also emphasized India's commitment to global anti-abuse standards through this decision.

The significance of Tax Residency Certificate (TRC)
TRC importance

A Tax Residency Certificate (TRC) is an important document that certifies a taxpayer's residency.

It helps claim treaty benefits and avoid double taxation in two countries for the same transaction.

In this case, the SC said mere possession of a TRC does not bar tax authorities from examining whether the Mauritius entity was only a shell or pass-through entity created to avoid tax.

SC's stance on treaty abuse and genuine residency
Treaty enforcement

The Supreme Court also clarified that the amendments to the India-Mauritius tax treaty were aimed at combating round-tripping and treaty abuse, not protecting artificial structures.

It emphasized that treaty benefits are only available to genuine resident entities with real commercial substance, not "front" entities controlled from elsewhere.

The court said once a transaction is found to be an impermissible tax avoidance arrangement, no treaty or grandfathering protection can apply.

Potential impact on foreign investment in India
Investment concerns

Tax experts believe the ruling indicates a stricter approach to tax treaty interpretation and an increased focus on economic substance over legal form.

This could dampen foreign investors' sentiment and lead to lower FDI and FPI inflows into India.

Sandeepp Jhunjhunwala, Partner at Nangia Global, said the verdict could prompt investors to rethink their holding structures and exit strategies, potentially affecting future M&A transactions involving India.