India: The Supreme Court Tiger Global Ruling Remodels the Architecture of Cross-Border Structures

The recent decision of the Supreme Court of India in the Tiger Global matter marks a defining moment in India’s approach to cross-border taxation and treaty interpretation. Beyond resolving a long-running dispute, the ruling sends a clear signal about how India’s highest court views investment structures that rely heavily on jurisdictional arbitrage and the application of General Anti Avoidance Rules at the threshold.

At the centre of the controversy lies Tiger Global, a prominent international investor whose India-facing investment structure reflected a model widely used for over a decade. The case raised fundamental questions around offshore holding structures, intermediary jurisdictions, and reliance on legal form to claim treaty benefits.

The Supreme Court decisively shifted focus from a documentation-centric approach to one emphasising commercial substance and purpose. Tax treaties were reaffirmed as instruments of relief, not vehicles for avoidance, requiring alignment with economic reality.

Equally significant is the Court’s endorsement of domestic anti-avoidance principles in treaty contexts. This places greater responsibility on investors to ensure legal form mirrors business substance.

From a policy standpoint, the ruling underscores India’s attempt to balance investor confidence with fiscal sovereignty. Treaty protection will be respected only where supported by genuine economic presence.

As India positions itself as a long-term destination for global capital, the Tiger Global ruling is likely to influence how future investments are structured, documented, and defended. For investors, advisors, and policymakers alike, the judgment is not merely a resolution of a single dispute—it is a statement of principle that will shape India’s international tax landscape for years to come.

We discuss the facts of the case and the Supreme Court Ruling in greater detail in the ensuing paragraphs.

The run up to the Supreme Court and the background

The respondents – taxpayers viz., Tiger Global International II Holdings, Tiger Global International III Holdings, and Tiger Global International IV Holdings, are private companies limited by shares, incorporated under the laws of Mauritius
The respondents entities acquired shares in Flipkart Pvt. Ltd., Singapore between 2011 and 2015, which in turn held substantial investments in Indian operating companies. Consequently, the value of the Singapore company was substantially derived from assets located in India. As part of Walmart Inc.’s global acquisition of Flipkart, the Mauritius entities sold their Singapore shareholding to a Luxembourg entity, resulting in significant capital gains.
The taxpayers made an application before the Indian tax authorities under Section 197 of the Income-tax Act, 1961 (‘the Act’) seeking a certificate for nil withholding tax. However, the tax authorities rejected the application by stating that the taxpayers would not be eligible to avail the benefits under the DTAA on the ground that they were not independent in their decision-making and that control over the decision- making relating to the purchase and sale of shares did not lie with them
The taxpayers then approached the Authority for Advance Rulings (AAR) seeking an advance ruling on the common question that “Whether, on the facts and circumstances of the case, gains arising to the taxpayers (private companies incorporated in Mauritius) from the sale of shares held by them in Flipkart Pvt. Ltd (a private company incorporated in Singapore) to Fit Holdings S.A.R.L. (a company incorporated in Luxembourg) would be chargeable to tax in India under the Act read with the DTAA between India and Mauritius?”
The AAR held that the transaction was prima facie designed for tax avoidance, thereby invoking the jurisdictional bar under Section 245R(2) of the Act. The decision was based on various findings which, inter-alia, included:
- The respondents were part of Tiger Global Management LLC, USA, and were held through its affiliates via a web of entities based in the Cayman Islands and Mauritius
- The overall control and management of the respondent companies did not lie with their Board of Directors in Mauritius, and that the authority to operate bank accounts for transactions above USD 250,000 vested with Mr. Charles P. Coleman
- Though the decisions for investment or sale were formally taken by the Boards of Directors of the respondent companies, real control over transactions exceeding USD 250,000 was exercised by Mr. Coleman through the non-resident Director, Mr. Steven Boyd (Mr Colemon not based in Mauritius, declared as beneficial owner in the application for GBL-1 filed with the Mauritius FSC, authorised signatory for immediate parent companies and the sole director controlling the ultimate holding companies)
- On this basis, it was held that the “head and brain” of the companies, was not in Mauritius and, therefore, their control and management were situated outside Mauritius, in the USA.
- The AAR also held that the objective of the DTAA was to provide exemption only for gains arising from the transfer of shares of an Indian company, and that such exemption was never intended for the transfer of shares of a company not resident in India. As there was neither any business operation in India nor any taxable revenue generated by the respondent, the transaction was a preordained arrangement created for the purpose of tax avoidance.
The taxpayers challenged the AAR’s decision before the Delhi High Court, which quashed the AAR order and held that the taxpayers were entitled to treaty benefits and that their income would not be chargeable to tax in India. The decision was based on various findings which, inter-alia, included:
- Error in AAR’s conclusions on various factual aspects
- The respondents were structured to operate as pooling vehicles for investments and held GBL-I under Mauritian law and had significant economic activity
- The mere presence of Directors connected with the TG Group, such as Mr. Charles P. Coleman and Mr. Steven Boyd, did not justify an inference of subservience or loss of independent agency. After taking note of the Board resolutions in detail, the High Court found that they reflected decisions taken collectively by the full Board. Though Mr. Coleman was authorised to approve expenditures beyond a threshold, such authority was conferred by a collective decision of the Board and required countersignature by other directors.
- The High Court held that Limitation of Benefits clauses are specifically designed to address treaty abuse and are determinative in such inquiries. Once LOB provisions are satisfied, the Revenue cannot erect additional barriers or invoke vague suspicions. The High Court further held that the LOB clause had been inserted into the DTAA in the backdrop of the introduction of Chapter XA in the Indian Income Tax Act, and Article 27A of the DTAA expressly grandfathered all transactions relating to shares acquired prior to 01.04.2017.

The High Court placed considerable reliance on the legal structure adopted by the investors and accorded primacy to the existence of tax residency and treaty eligibility, thereby limiting the scope for a deeper inquiry into the application of anti-avoidance rules to the arrangement specially on the overriding nature of the rules. Aggrieved by this interpretation, the Revenue carried the matter in appeal to the Supreme Court of India, contending that the High Court’s approach unduly constrained the application of anti-avoidance principles and failed to address the broader issue of treaty abuse.

The Supreme Court proceedings

The Indian Revenue placed the following arguments before the Supreme Court:

The High Court proceeded to adjudicate the issue on merits, which was impermissible given the non-conclusive determination of tax liability by the TDs officer and the AAR expressly refrained from rendering any final determination.
Given that India retains the authority to determine taxability under its domestic law (being the source state vested with sovereign taxing powers), Indian tax authorities are entitled to examine whether the assessee is a resident of the other Contracting state, namely, Mauritius, by applying the domestic law of that State under Article 4(1) of the DTAA (even when an entity holds a TRC and is incorporated in Mauritius)
Transaction constitutes an indirect transfer taxable under Section 9(1) of the Act read with Explanations 4 and 5, introduced by the Finance Act, 2012, which codify the “look-through” principle. The “substance” test is not a test for treaty entitlement per se, but an independent anti-abuse safeguard.
TRC constitutes only prima facie evidence of residence and cannot override the principle of “substance over form.” Issuance of a TRC does not foreclose inquiry into actual control and management or application of “substance over form”.
Sections 90(4) and 90(5), inserted by the Finance Act, 2012, do not render a TRC conclusive. This interpretation ignores the simultaneous introduction of GAAR under Chapter X-A of the Act. Section 90(2A) of the Act expressly provides that GAAR overrides DTAA benefits where impermissible avoidance arrangements are found. Further, business investments and indirect transfers do not fall under exclusion from GAAR scrutiny.
Circular No. 789 was a policy measure intended to provide certainty to FIIs and similarly placed investors. It does not extend to business investments or indirect transfers. Circular No. 1 dated 10.02.2003 is also silent on indirect transfers.
Circular No. 789 applies to “residents” of Mauritius under Article 4 of the DTAA and that the categorisation of an entity as an FII or investment fund is a creation of Indian law, without relevance under Mauritian law. Further, the Circular predates the introduction of GBLs, which were brought in only under the Financial Services Act, 2001. By the time, the 2007 Act came into force, all entities were required to obtain GBLs, a development not contemplated by the Circular.
The SC ruling in Azadi Bachao Andolan and Vodafone affirm that while a TRC is relevant, it is not conclusive, and authorities may examine the real nature of the transaction. It was also highlighted that the factual and statutory context of the present case was materially distinct to that of Azadi Bachao Andolan
After the 2017 amendment to Article 13 of India – Mauritius DTAA, direct transfers are governed by Articles 13(3A) and 13(3B) and they have Limitation of Benefit clause (Specific Anti Abuse Rule) to counter treaty abuse. Transaction in question involves an indirect transfer and is governed by Article 13(4). Given Article 13(4) is not subject to any LOB provision, it was contended that once treaty abuse is established in respect of such transaction, the DTAA ceases to govern the transaction and the matter must necessarily be tested under the Income Tax Act, 1961.
Chapter XA (General Anti Avoidance Rules) is deliberately framed as an overreaching anti-abuse regime. GAAR was not accorded blanket grandfathering. Had GAAR been wholly grandfathered, it would have immunised transactions that were, even under pre-existing jurisprudence, open to scrutiny for tax avoidance. Hence, the plea that all investments stand insulated from GAAR merely by reason of temporal precedence was characterised as unsustainable.
Once GAAR came into effect with effect from 01.04.2017, any income earning transaction forming part of an arrangement must undergo scrutiny under Chapter X-A, regardless of whether the underlying investment or structure originated prior to that date.
While Rule 10U(1) enumerates four categories of exclusions from GAAR, Rule 10U(2) specifies the circumstances in which GAAR would apply even to arrangements linked to pre-2017 investments. Deliberate use of distinct expressions in Rule 10U, namely “arrangement” in Rule 10U(1)(a) and Rule 10U(2), and “investment” in Rule 10U(1)(d), cannot be ignored.
Circular dated 27.01.2017 issued by the Central Board of Direct Taxes (‘CBDT’) and the Shome Committee Report are confined to the treatment of “investments” and do not extend to complex “arrangements” lacking commercial substance.

The counter arguments by the Taxpayers are summarised as under:

Article 4 of the DTAA makes it explicit that the Treaty permits each Contracting State to apply its own domestic tests of residency, and that such State alone is competent to determine whether a person is “liable to tax” within its jurisdiction. The term “person” must therefore be understood as referring to an entity treated as a taxable unit under the domestic law of the Contracting State
The enquiry into “head and brain” was directed solely at challenging the validity of the TRC and proceeded on the flawed premise that Indian authorities are entitled to interpret the Financial Services Act, 2007 of Mauritius and other Mauritian laws to determine whether the respondents are “liable to tax” in Mauritius. Such an approach, it was submitted, is contrary to the express language of Article 4 of the DTAA.
Reliance was placed on Section 90(4) of the Act, which makes it clear that the question whether a person is a resident of a foreign State must be determined by that State alone. Section 90(5) further stipulates that the assessee must provide any additional prescribed documents. Thus, the documentation required to claim DTAA benefits is exhaustively enumerated.
Circular 789 remains in force and explicitly states that “wherever a certificate of residence is issued by the Mauritian authorities, such certificate will constitute sufficient evidence for accepting the status of residence as well as beneficial ownership for applying the DTAC accordingly.” Circular No. 789 applies only to FIIs or NRIs and not to GBL holders is liable to be rejected as being contrary to the language of the Circular, which extends to “other investment funds, etc.”
Circular 789 was expressly upheld by this Court in Azadi Bachao Andolan, where it was observed that had the Contracting States intended to restrict treaty benefits for nationals of third countries, a suitable limitation clause would have been inserted. In the absence of such a clause, no disabling condition can be judicially introduced.
Domestic law doctrines such as “lifting the corporate veil” or “substance over form” cannot be invoked to deny treaty benefits in the absence of express treaty language to that effect. Treaty provisions operate as a self-contained code; unilateral domestic doctrines cannot override them.
Treaty abuse concerns were comprehensively addressed through the 2016 Protocol to the DTAA, which came into effect from 01.04.2017. The amended provisions operate prospectively and do not affect gains arising from investments made prior thereto. This demonstrates that exclusive taxing rights over capital gains vested in Mauritius prior to 01.04.2017.
Treaty constitutes a complete code, and unless the Treaty expressly incorporates domestic law, changes in domestic law cannot alter Treaty interpretation.
The SC ruling in Vodafone reaffirmed the “look at” principle, requiring the Court to view the transaction holistically rather than through a dissecting lens. The respondents’ investment structure was long-standing, commercially rational, and had generated taxable revenues; thus, characterising it as a preordained tax avoidance scheme contradicts Vodafone.
With respect to GAAR grandfathering, only income from transfer of pre-2017 investment is protected. Rule 10U(2) does not dilute Rule 10U(1)(d). That reading would render Rule 10U(1)(d) redundant – an interpretation contrary to settled principles.
Reliance was placed on the Shome Committee Report, the Finance Minister’s 2015 Budget Speech, the 2016 Protocol, CBDT Circulars, and FAQs to emphasise that GAAR applies only prospectively to investments made on or after 01.04.2017. Pre-2017 investments are fully grandfathered.
The supposed distinction between FIIs and GBL entities is illusory. Indian authorities are precluded from going behind the TRC issued to GBL holders except in cases where dual residence triggers Article 4(3).
Statutory bar under Section 245R(2)(iii) requires clear evidence of a premeditated tax avoidance design, which is absent; the transaction was commercially driven and lawful; and exemption was claimed solely on treaty allocation of taxing rights, which does not attract Section 245R(2)(iii).

Ruling of the Supreme Court

The Supreme Court highlighted that they were inclined to deal with the core issue alone that revolves around the present case, viz.,

“Whether the AAR was right in rejecting the applications for Advance Ruling on the ground of maintainability, by treating the capital gains arising out of a transaction of sale of shares of a Singapore Co., which holds the shares of an Indian company, by a Mauritian company controlled by an American company, to be prima facie an arrangement for tax avoidance, and hence, whether it can be enquired into to ascertain whether the capital gains would be taxable in India under the Income Tax Act read with the relevant provisions of the Mauritius Treaty or not?”

The SC held that the Revenue has proved that the transactions in the instant case are impermissible tax-avoidance arrangements, and the evidence prima facie establishes that they do not qualify as lawful. Consequently, Chapter X-A becomes applicable. The applications preferred by the taxpayers relate to a transaction designed prima facie for tax avoidance and were rightly rejected as being hit by the threshold jurisdictional bar to maintainability, as enshrined in proviso (iii) to Section 245R(2).

Accordingly, capital gains arising from the transfers effected after the cut-off date, i.e., 01.04.2017, are taxable in India under the Income Tax Act read with the applicable provisions of the DTAA. Given this, the Delhi HC order has been set aside.

Apart from the ruling, the Supreme Court made various observations and findings fter taking note of various Circulars issued from time to time and their background, DTAA amendments, domestic law changes (GAAR, indirect tax transfers, judicial rulings, etc), Speeches of the FM, Shome Committee, etc]. Some of the findings worth noting given their far-reaching impact has been summarised hereunder:

Indirect sale of shares would not, at the threshold, fall within the treaty protection contemplated under Article 13 of India – Mauritius DTAA
The cut-off date on the sale of shares contemplated under the Agreement in Article 13 is restricted only to cases falling under Paragraph 3A, and transactions falling outside its purview are governed by Article 13(4), subject to the alienator being a resident. The assessee, hence, has to establish that it is a resident of the Contracting State covered by the DTAA by producing all relevant documents.
The provisions of Sections 4 and 5 of the Act are expressly made subject to the provisions of the Act, which would include Section 90. The judicial consensus in India has been that Section 90 is specifically intended to enable and empower the Central Government to issue a notification for the implementation of the terms of a DTAA. However, the amendments subsequent to the Vodafone to Chapter IX, the insertion of Chapter XA, the amendments to Rule 10U, and the DTAA have completely changed the scenario. Circulars issued earlier, though binding on the Revenue at the time of their issuance, operate only within the legal regime in which they were issued and cannot override subsequent statutory amendments. It is equally settled law that Parliament is well within its right to bring in a law, either by amendment, substitution, or introduction so as to remove the basis of a judicial decision.
After the amendment has come into effect, there can be no doubt whatsoever that a TRC alone is not sufficient to avail the benefits under the DTAA, and reliance upon earlier judgments dealing with circulars issued in the pre-amendment regime cannot ipso facto come to the aid of the respondents. Rather, the facts will have to be independently analysed to decide on the applicability of Chapter XA.
Section 90(4) of the Act only speaks of the TRC as an "eligibility condition". It does not state that a TRC is "sufficient" evidence of residency, which is a slightly higher threshold. The TRC is not binding on any statutory authority or Court unless the authority or Court enquires into it and comes to its own independent conclusion. The TRC relied upon by the applicant is nondecisive, ambiguous and ambulatory, merely recording futuristic assertions without any independent verification. Thus, the TRC lacks the qualities of a binding order issued by an authority.
Undoubtedly, the mere holding of a TRC cannot, by itself, prevent an enquiry subsequent to the amendments brought into the statute, particularly by the introduction of Section 90 (2A) and Chapter XA to the Act and the Rules, if it is established that the interposed entity was a device to avoid tax.
By the use of the words “without prejudice to the provisions of clause (d) of sub-rule (1)”, Chapter XA is made applicable to any arrangement, irrespective of the date on which it was entered into, in respect of a tax benefit obtained from such arrangement on or after 01.04.2017. Therefore, the prescription of the cut-off date of investment under Rule 10U(1)(d) stands diluted by Rule 10U(2), if any tax benefit is obtained based on such arrangement. The duration of the arrangement is irrelevant.
Once the mechanism is found to be illegal or sham, it ceases to be “a permissible avoidance” and becomes “an impermissible avoidance” or “evasion”. The Revenue is, therefore, entitled to enquire into the transaction to determine whether the claim of the taxpayers for exemption is lawful.

The Impact of the Supreme Court for similar investors/structures and other larger impact

At the outset, in our view, the ruling would have far reaching impact on the existing structures and provide guidance on the applicability of GAAR, interplay of GAAR and DTAA and aspects around it. However, few of the findings would open the door for more litigation like TRC alone not sufficient to avail the benefits under the DTAA given the recent amendments, reliance upon earlier judgments dealing with circulars issued in the pre-amendment regime cannot ipso facto come to the aid of the respondents, etc)

The ruling of the Supreme Court of India carries of the Tiger Global case or the traditional debate around Mauritius-based investment vehicles. At a conceptual level, the judgment recalibrates the balance between taxpayer certainty and revenue discretion by significantly expanding the circumstances in which tax authorities may look behind formally valid documentation. What was earlier treated as a relatively settled framework for claiming treaty benefits has now been replaced with a more open-ended, substance-driven inquiry.

One of the most consequential aspects of the ruling is its treatment of the Tax Residency Certificate (TRC). By holding that a TRC is not conclusive proof of treaty entitlement, the Court has effectively diluted the long-standing statutory and treaty-based presumption attached to such certificates. This opens the door for Indian tax authorities to challenge not only the use of intermediary jurisdictions but also the very validity and relevance of residence certifications issued by foreign governments. The practical effect could be a shift from a rule-based system to a discretionary, fact-intensive assessment, increasing uncertainty for taxpayers relying on cross-border documentation.

Importantly, the ramifications are not confined to capital gains or investment exits. The logic of the judgment can be extended to all foreign payments where treaty relief is claimed—including interest, royalties, fees for technical services, and other cross-border remittances. If tax authorities are now empowered to question treaty eligibility despite the presence of formally valid documentation, payers and recipients alike face heightened exposure to withholding tax disputes, reassessments, and prolonged litigation. This may fundamentally alter how Indian businesses approach compliance for outbound payments.

The Finance Ministry in India could offer some certainty on this by possibly issuing a Circular or an Instruction on situations where the validity could be challenged.

From a treaty law perspective, the judgment invites renewed debate on India’s obligations under its network of tax treaties. While anti-abuse measures are undeniably a legitimate objective, treaties are premised on certainty, reciprocity, and predictable allocation of taxing rights. An overly expansive domestic interpretation of substance and purpose may blur the line between permissible anti-avoidance enforcement and unilateral treaty override. How India reconciles this approach with its international commitments will be closely watched by treaty partners and global investors alike.

In sum, the impact of the ruling lies not merely in curbing treaty shopping but in redefining the architecture of cross-border tax certainty in India. By broadening the scope for challenging treaty claims and supporting documents, the decision introduces a new compliance and risk paradigm for all foreign transactions involving India. Whether this shift ultimately strengthens the tax system or deters legitimate cross-border commerce will depend on how cautiously and consistently the principles laid down by the Court are applied in practice. And finally, how the Revenue Authorities view and apply this decision!