The Income Tax Department will now proceed to complete the capital gains tax assessment related to Tiger Global’s exit from Flipkart in 2018, following a recent Supreme Court ruling in favour of the tax authorities, sources in the Central Board of Direct Taxes (CBDT) said.
The case relates to Tiger Global’s sale of its stake in Flipkart to Walmart Inc. for over ₹14,500 crore. A refund claim of approximately ₹967.52 crore, arising from tax deducted at source (TDS), continues to remain on hold pending completion of the assessment.
Flipkart-Walmart Deal and Tiger Global Exit
In 2018, US-based Walmart Inc. acquired a controlling stake in Flipkart in a global transaction valued at about USD 16 billion. As part of the deal, three Mauritius-based Tiger Global entities exited a substantial portion of their investments.
The exit resulted in significant capital gains, with the aggregate consideration received exceeding ₹14,500 crore.
Withholding of Tax and Refund Claim
At the time of the transaction, Tiger Global sought nil withholding, claiming the capital gains were not taxable in India.
CBDT sources said the TDS Assessing Officer, after a prima facie examination, declined to issue a nil withholding certificate. Instead, reduced-rate withholding certificates were granted after noting that control over the entities did not appear to lie in Mauritius.
Based on these certificates, tax was deducted at source, amounting to approximately ₹967.52 crore across the three Tiger Global entities.
CBDT sources clarified that the withholding was an interim measure and not a final determination of tax liability, as the issue of taxability itself was under dispute at the remittance stage.
Supreme Court Ruling Revives Assessment Proceedings
Following the Supreme Court’s judgment, the assessment proceedings for Assessment Year (AY) 2019-20, which had effectively remained in abeyance due to ongoing litigation, will now resume.
“The Assessing Officer will proceed to complete the assessments in line with the Supreme Court’s ruling. The refund claim of approximately ₹967.52 crore, withheld under Section 241A, will be addressed as part of the assessment and consequential demand proceedings,” CBDT sources said.
Apex Court Verdict on Indirect Transfer
On January 15, 2026, the Supreme Court allowed the revenue department’s appeals, overturning the 2024 Delhi High Court judgment.
The court held that the transaction involving the sale of shares of Flipkart Singapore by Tiger Global’s Mauritius entities amounted to an indirect transfer taxable in India.
It ruled that mere possession of a Tax Residency Certificate (TRC) does not preclude an inquiry into whether an entity functions as a conduit. The court further held that the revenue department had established an impermissible avoidance arrangement, and that amendments to the India-Mauritius Double Taxation Avoidance Agreement (DTAA) were intended to curb treaty abuse.
Competing Positions of Tiger Global and Tax Authorities
Tiger Global had argued that the capital gains arose from investments made before April 1, 2017, and were therefore protected under the grandfathering provisions of the India–Mauritius tax treaty. It also relied on valid TRCs issued by Mauritius authorities to claim full treaty protection and a nil tax liability in India.
The Income Tax Department, however, took the view that the Mauritius entities had limited commercial substance, with real control and decision-making lying outside Mauritius. The structure, it argued, was designed primarily to obtain treaty benefits.
Litigation Timeline
- 2020: Authority for Advance Rulings (AAR) ruled against Tiger Global
- August 2024: Delhi High Court overturned the AAR ruling
- January 2025: Supreme Court stayed the High Court decision
- January 15, 2026: Supreme Court ruled in favour of the tax department
CBDT sources said the department could not proceed with the assessment earlier as the core issue of taxability was sub judice before the Supreme Court.
CBDT on High-Value Tax Disputes
CBDT sources emphasised that large tax demands or withheld refunds in high-value transactions should not automatically be viewed as arbitrary.
“In such cases, the tax figures reflect the size of the underlying transaction. Pending demands or withheld refunds often arise from unresolved legal questions awaiting final judicial determination,” sources said, adding that the Supreme Court judgment reaffirmed the importance of economic and fiscal sovereignty in safeguarding public revenue.
Source: Moneycontrol