The amount represents tax deducted at source at the time of Walmart’s 2018 acquisition of Flipkart, after the tax department declined to grant nil withholding certificates to three Mauritius-based Tiger Global entities. The entities had sought an exemption under the India-Mauritius tax treaty.
Officials said assessment proceedings for the 2019-20 assessment year, which had been kept in abeyance due to pending litigation, would now be revived in line with the Supreme Court’s January 15 judgment. “The withholding was always provisional. With the issue of treaty eligibility now settled by the Supreme Court, the amount will be dealt with as part of the final assessment and consequential demand,” a senior official said.
Tiger Global routed its Flipkart investments through Singapore entities held by Tiger Global International II Holdings, III Holdings and IV Holdings in Mauritius (collectively, the Tiger Global Mauritius entities).
These Mauritius entities transferred shares in the Singapore entities, which in turn derived their entire value from investments in Flipkart in India. From the exit, the entities received aggregate consideration exceeding ₹14,500 crore. They claimed the resulting capital gains were exempt in India under Article 13(4) of the India-Mauritius double taxation avoidance treaty (DTAA) and the grandfathering provisions, citing tax residency certificates (TRCs) issued by the Mauritius authorities.
The tax department examined the structure and formed a prima facie view that the Mauritius entities lacked independent commercial substance, with control and decision-making exercised outside Mauritius. On this basis, their applications for nil withholding certificates under Section 197 were rejected, resulting in tax deducted at source of around ₹967.52 crore.
After filing its return for the 2019-20 assessment year, Tiger Global claimed a refund of the entire amount, reiterating that no tax was payable in India. Officials said the refund was withheld under Section 241A due to the pending proceedings and uncertainty over the core question of treaty eligibility.
The dispute began with the Authority for Advance Rulings ruling against Tiger Global in 2020, before the Delhi High Court reversed the decision in August 2024. The revenue then challenged the high court ruling in the Supreme Court, which stayed the judgment in January 2025. The stay effectively prevented the assessments from being finalised while the matter was sub judice.
In its January 15, 2026, verdict, the Supreme Court allowed the revenue’s appeals, holding that possession of a tax residency certificate did not prevent the tax department from examining whether an entity was a conduit or whether an arrangement amounted to impermissible tax avoidance. The court also observed that amendments to the India-Mauritius DTAA were intended to curb treaty abuse.
According to officials, the case illustrates why high-value cross-border transactions often remain in litigation for long periods. “Pending demands or withheld refunds in such matters are a consequence of unresolved legal issues, not administrative overreach,” one official said, adding that final certainty emerges only once the highest court settles the law.
“The Supreme Court’s decision has again brought to light that treaty eligibility must be examined on the facts of each case. The issue of a TRC does not necessarily mean taxpayers are entitled to treaty benefits. It clarifies that merely holding a TRC is not sufficient proof of residency, particularly in structured transactions that lack commercial substance, where the management of the entities is outside the treaty country — here, Mauritius,” said Sandeep Bhalla, partner at Dhruva Advisors.
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