Supreme Court Rules Tiger Global Must Pay Capital Gains Tax on 2018 Flipkart Stake Sale

India’s Supreme Court on Thursday ruled that US investment firm Tiger Global must pay capital-gains tax on its 2018 sale of a stake in Flipkart to Walmart, overturning a Delhi High Court judgment that had allowed the firm to claim exemptions under the India–Mauritius tax treaty. The ruling is a significant win for Indian tax authorities and is expected to influence how offshore exits routed through treaty jurisdictions are scrutinised going forward.

A two-judge bench comprising Justices J.B. Pardiwala and R. Mahadevan set aside the August 2024 high court order and held that the transaction amounted to a tax-avoidance arrangement that could not enjoy treaty protection. The court said the deal structure was prima facie designed to avoid Indian tax, applying anti-avoidance principles to deny the benefit of the Double Taxation Avoidance Agreement (DTAA).

What Transaction is at Issue?

The dispute relates to Tiger Global’s sale of about three-quarters of its remaining stake in Flipkart to Walmart as part of Walmart’s 2018 acquisition of the Indian e-commerce firm. Tax authorities had argued that Tiger Global routed the exit through Mauritius-based entities acting as conduits to claim treaty exemption. The Supreme Court agreed with that assessment. The transaction under challenge has been widely reported to be worth around $1.6 billion.

The case has moved through multiple forums over several years. The Authority for Advance Rulings initially denied treaty benefits, the Delhi High Court later ruled in Tiger Global’s favour, and the tax department appealed. The Supreme Court stayed the high court ruling in January 2025 and has now reversed it, restoring the tax department’s position.

Amount, Penalties & Next Steps

Tax experts say the judgment could have wide implications for foreign investors and private-equity funds that rely on treaty jurisdictions to structure exits from India. By emphasising substance over form and rejecting the use of conduit entities, the ruling signals a tougher judicial approach to treaty abuse.

The exact capital-gains tax liability and any penalties will be determined through subsequent assessment proceedings. Tiger Global has not commented publicly on the ruling so far, and while it can seek a review, such challenges are rarely successful.