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What is the story about?
Nearly ₹967.52 crore in tax withheld from Tiger Global’s exit from Flipkart is set to crystallise into a confirmed tax demand, after the Supreme Court ruled in favour of the Revenue, bringing long-running litigation linked to Walmart’s 2018 acquisition of Flipkart to a close, CNBCTV18 has learnt from sources.
The dispute arose from capital gains generated by Tiger Global, the US-based private equity firm, when it exited part of its investment in Flipkart as part of Walmart Inc.’s $16 billion acquisition of a controlling stake in the e-commerce major. The transaction was among the largest cross-border deals in India’s digital economy and involved significant offshore capital flows, according to CNBCTV18 sources familiar with the matter.
How the dispute arose
Tiger Global’s investment in Flipkart was held through three Mauritius-based entities—Tiger Global International II Holdings, Tiger Global International III Holdings and Tiger Global International IV Holdings. These investments were made prior to April 1, 2017, when the India–Mauritius Double Taxation Avoidance Agreement (DTAA) granted exemption from Indian capital gains tax on such transfers, subject to conditions, sources said.
When Walmart acquired Flipkart in 2018, the three Tiger Global entities exited a substantial portion of their holdings, receiving aggregate consideration exceeding ₹14,500 crore. Of this, approximately ₹13,122 crore accrued to Tiger Global International II Holdings, ₹1,259 crore to Tiger Global International III Holdings, and ₹58 crore to Tiger Global International IV Holdings, as per information reviewed by CNBCTV18.
Tiger Global claimed that the gains were fully exempt under the grandfathering provisions of the DTAA and that India had no taxing rights, relying on valid Tax Residency Certificates (TRCs) issued by Mauritius authorities, sources added.
Revenue flags treaty abuse concerns
The Indian tax authorities, however, questioned whether treaty benefits could be claimed automatically. Based on their examination, the Department took a prima facie view that the Mauritius entities lacked sufficient commercial substance, that real control and decision-making lay outside Mauritius, and that the structure was designed primarily to obtain treaty benefits, raising concerns of impermissible tax avoidance, CNBCTV18 sources said.
At the transaction stage, Tiger Global applied for a nil withholding certificate under section 197 of the Income-tax Act. The TDS Assessing Officer declined to grant nil withholding and instead issued reduced-rate withholding certificates, noting that control did not appear to vest in Mauritius. Consequently, tax aggregating to about ₹967.52 crore was deducted at source across the three entities, according to sources.
Importantly, this withholding was not a final determination of tax liability but an interim measure, given that taxability itself was disputed at the remittance stage.
Refund claim and stalled assessments
For Assessment Year 2019–20, Tiger Global filed its income tax return claiming a refund of the entire TDS amount, reiterating its position of non-taxability. The Department, however, treated the income as potentially taxable, withheld the refund under section 241A, and kept assessments pending, linking them to the outcome of the treaty dispute, CNBCTV18 has learnt.
The matter moved through multiple judicial forums. In 2020, the Authority for Advance Rulings ruled against Tiger Global. The Delhi High Court reversed this decision in August 2024, holding that the grandfathering provisions applied and that the TRC was sufficient on the facts.
The Revenue appealed to the Supreme Court, which stayed the High Court ruling in January 2025. As a result, assessments remained effectively in abeyance, since any order would have been contingent on the final outcome before the apex court, sources said.
Supreme Court verdict brings finality
On January 15, 2026, the Supreme Court allowed the Revenue’s appeals, ruling that possession of a TRC does not bar enquiry into whether an entity is a conduit, that amendments to the India–Mauritius DTAA were aimed at curbing treaty abuse, and that the arrangement in question constituted impermissible avoidance, according to CNBCTV18 sources tracking the judgment.
With the apex court settling the legal issue, the assessment proceedings for AY 2019–20 are now expected to resume. The withheld refund of ₹967.52 crore will be adjusted as part of the final assessment and consequential demand, sources said.
Why the case matters
Tax experts note that the Tiger Global case underscores the realities of high-value cross-border tax litigation, where disputes over treaty interpretation and anti-avoidance principles can remain unresolved for years. Pending demands or withheld refunds in such cases should not automatically be viewed as coercive, as they often reflect unsettled questions of law awaiting judicial finality, sources told CNBCTV18.
The ruling also reinforces the State’s ability to scrutinise offshore holding structures in large transactions, particularly where treaty benefits are claimed, marking a significant moment in India’s evolving anti-avoidance jurisprudence.
The dispute arose from capital gains generated by Tiger Global, the US-based private equity firm, when it exited part of its investment in Flipkart as part of Walmart Inc.’s $16 billion acquisition of a controlling stake in the e-commerce major. The transaction was among the largest cross-border deals in India’s digital economy and involved significant offshore capital flows, according to CNBCTV18 sources familiar with the matter.
How the dispute arose
Tiger Global’s investment in Flipkart was held through three Mauritius-based entities—Tiger Global International II Holdings, Tiger Global International III Holdings and Tiger Global International IV Holdings. These investments were made prior to April 1, 2017, when the India–Mauritius Double Taxation Avoidance Agreement (DTAA) granted exemption from Indian capital gains tax on such transfers, subject to conditions, sources said.
When Walmart acquired Flipkart in 2018, the three Tiger Global entities exited a substantial portion of their holdings, receiving aggregate consideration exceeding ₹14,500 crore. Of this, approximately ₹13,122 crore accrued to Tiger Global International II Holdings, ₹1,259 crore to Tiger Global International III Holdings, and ₹58 crore to Tiger Global International IV Holdings, as per information reviewed by CNBCTV18.
Tiger Global claimed that the gains were fully exempt under the grandfathering provisions of the DTAA and that India had no taxing rights, relying on valid Tax Residency Certificates (TRCs) issued by Mauritius authorities, sources added.
Revenue flags treaty abuse concerns
The Indian tax authorities, however, questioned whether treaty benefits could be claimed automatically. Based on their examination, the Department took a prima facie view that the Mauritius entities lacked sufficient commercial substance, that real control and decision-making lay outside Mauritius, and that the structure was designed primarily to obtain treaty benefits, raising concerns of impermissible tax avoidance, CNBCTV18 sources said.
At the transaction stage, Tiger Global applied for a nil withholding certificate under section 197 of the Income-tax Act. The TDS Assessing Officer declined to grant nil withholding and instead issued reduced-rate withholding certificates, noting that control did not appear to vest in Mauritius. Consequently, tax aggregating to about ₹967.52 crore was deducted at source across the three entities, according to sources.
Importantly, this withholding was not a final determination of tax liability but an interim measure, given that taxability itself was disputed at the remittance stage.
Refund claim and stalled assessments
For Assessment Year 2019–20, Tiger Global filed its income tax return claiming a refund of the entire TDS amount, reiterating its position of non-taxability. The Department, however, treated the income as potentially taxable, withheld the refund under section 241A, and kept assessments pending, linking them to the outcome of the treaty dispute, CNBCTV18 has learnt.
The matter moved through multiple judicial forums. In 2020, the Authority for Advance Rulings ruled against Tiger Global. The Delhi High Court reversed this decision in August 2024, holding that the grandfathering provisions applied and that the TRC was sufficient on the facts.
The Revenue appealed to the Supreme Court, which stayed the High Court ruling in January 2025. As a result, assessments remained effectively in abeyance, since any order would have been contingent on the final outcome before the apex court, sources said.
Supreme Court verdict brings finality
On January 15, 2026, the Supreme Court allowed the Revenue’s appeals, ruling that possession of a TRC does not bar enquiry into whether an entity is a conduit, that amendments to the India–Mauritius DTAA were aimed at curbing treaty abuse, and that the arrangement in question constituted impermissible avoidance, according to CNBCTV18 sources tracking the judgment.
With the apex court settling the legal issue, the assessment proceedings for AY 2019–20 are now expected to resume. The withheld refund of ₹967.52 crore will be adjusted as part of the final assessment and consequential demand, sources said.
Why the case matters
Tax experts note that the Tiger Global case underscores the realities of high-value cross-border tax litigation, where disputes over treaty interpretation and anti-avoidance principles can remain unresolved for years. Pending demands or withheld refunds in such cases should not automatically be viewed as coercive, as they often reflect unsettled questions of law awaiting judicial finality, sources told CNBCTV18.
The ruling also reinforces the State’s ability to scrutinise offshore holding structures in large transactions, particularly where treaty benefits are claimed, marking a significant moment in India’s evolving anti-avoidance jurisprudence.
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