Flipkart Exit Deal Faces Tax Setback For Tiger Global, Supreme Court Overturns Delhi High Court Order On $1.6 Billion Walmart Sale
India’s Supreme Court has ruled that US investment firm Tiger Global must pay capital gains tax in India on profits from its 2018 exit from Flipkart. The court overturned a Delhi High Court order, saying the deal structure was used mainly to avoid tax benefits.
The Supreme Court | File Photo
New Delhi: India’s Supreme Court of India has ruled that US-based investment firm Tiger Global must pay tax in India on gains made from its exit from Flipkart in 2018.
A bench led by Justice J.B. Pardiwala and Justice R. Mahadevan overturned an August 2024 order of the Delhi High Court, which had earlier cancelled the tax demand raised by the Income Tax Department.
What the court said?
The Supreme Court said that the shares sold by Tiger Global were moved through a special arrangement that went against the spirit of the law. Because of this, the company could not claim tax relief under the India–Mauritius tax treaty. The court ruled that treaty benefits are not allowed if the main aim of the structure is to avoid tax.
Why the ruling matters?
This decision is seen as a big setback for Tiger Global and an important win for India’s tax authorities. According to reports, the ruling sends a strong message to foreign investors who route investments through countries like Mauritius or Singapore mainly to reduce tax. It clearly says that such benefits will not be allowed if there is no real business purpose.
The background of the dispute
Tiger Global bought shares in Flipkart Singapore between October 2011 and April 2015. These shares were later transferred to a Luxembourg-based company called Fit Holdings SARL.
In 2018, when Walmart bought a large stake in Flipkart, Tiger Global exited the company by selling its USD 1.6 billion holding.
Earlier rulings and tax department’s stand
In February 2019, Tiger Global approached the Authority for Advance Rulings (AAR). The AAR said the group structure showed signs of being created mainly to save tax. It also noted that real control was in the US, not Mauritius.
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The tax department argued that the Mauritius company was only a front with no real presence. It also rejected the tax residency certificate shown by Tiger Global.
What it means going forward?
The ruling strengthens India’s stand against tax avoidance and sets a clear example for future cross-border investment deals.
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