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16 Jan 2026·Source: The Indian Express
2 min
EconomyPolity & GovernanceNEWS

Supreme Court: Tiger Global Taxable on Flipkart Stake Sale

SC rules Tiger Global liable for tax on Flipkart stake sale.

Supreme Court: Tiger Global Taxable on Flipkart Stake Sale

Photo by Fine Photographics

The Supreme Court has ruled that Tiger Global is liable to pay tax on the gains it made from selling its stake in Flipkart. A bench of Justices JB Pardiwala and Manoj Misra set aside an order of the Authority for Advance Rulings (AAR) that Tiger Global was not liable to pay tax under the India-Mauritius Double Taxation Avoidance Agreement (DTAA). The court held that the gains from the stake sale are taxable in India.

UPSC Exam Angles

1.

GS Paper III (Economy): Taxation, Investment Models

2.

Connects to: International Taxation, DTAA, BEPS

3.

Potential Question Types: Statement-based, Analytical

Visual Insights

India's DTAA Network

Map showing countries with which India has Double Taxation Avoidance Agreements (DTAAs). Highlighted countries represent key investment hubs.

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📍Mauritius📍Singapore📍Netherlands📍United Kingdom📍United States
More Information

Background

The India-Mauritius Double Taxation Avoidance Agreement (DTAA) was originally signed in 1982, aiming to foster investment flows between the two countries. Mauritius, with its low tax regime, became a popular route for foreign investment into India, particularly in sectors like finance and real estate. The treaty provided that capital gains arising from the sale of shares of Indian companies by Mauritian residents would be taxable only in Mauritius, effectively leading to zero taxation in India.

This provision led to significant debate and concerns about revenue loss for India. Over time, India renegotiated the DTAA to address these concerns, culminating in amendments that allowed India to tax capital gains arising from investments made after a certain date, phasing out the tax exemption gradually.

Latest Developments

In recent years, India has been actively renegotiating its DTAAs with various countries to align with global standards and prevent tax avoidance. The Base Erosion and Profit Shifting (BEPS) project, led by the OECD, has influenced these renegotiations, pushing for measures to ensure that profits are taxed where economic activities occur and value is created. India's stance on taxing offshore transactions involving the transfer of assets located in India has become increasingly assertive.

The retrospective taxation amendment, though controversial, signaled India's willingness to pursue tax claims on past transactions. Future developments are likely to focus on enhancing tax transparency and information exchange with other jurisdictions to combat tax evasion effectively.

Practice Questions (MCQs)

1. Consider the following statements regarding Double Taxation Avoidance Agreements (DTAAs): 1. DTAAs are bilateral agreements between two countries to avoid taxing the same income twice. 2. DTAAs can only be entered into with countries that have a lower tax rate than India. 3. The primary goal of a DTAA is to promote cross-border investment and trade. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.1 and 3 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is correct as DTAAs aim to prevent double taxation. Statement 3 is correct as they promote investment. Statement 2 is incorrect; DTAAs can be with any country regardless of tax rate.

2. In the context of international taxation, what does 'Base Erosion and Profit Shifting' (BEPS) refer to?

  • A.A method of calculating GDP across different countries
  • B.Tax avoidance strategies used by multinational enterprises to shift profits to low-tax locations
  • C.A type of foreign direct investment that focuses on infrastructure projects
  • D.A system for regulating international trade agreements
Show Answer

Answer: B

BEPS refers to tax avoidance strategies used by multinational enterprises to exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

3. Which of the following statements is NOT correct regarding the taxation of capital gains arising from the sale of shares by Foreign Portfolio Investors (FPIs) in India?

  • A.Capital gains are generally taxable in India.
  • B.DTAAs can provide exemptions or reduced tax rates.
  • C.The applicability of DTAA depends on the country of residence of the FPI.
  • D.Capital gains are always exempt from tax if the shares are sold on a recognized stock exchange.
  • E.E) Securities Transaction Tax (STT) is applicable on sale of shares.
Show Answer

Answer: D

Capital gains are not always exempt even if shares are sold on a recognized stock exchange. While STT is applicable, the capital gains are still subject to tax, though at a concessional rate in some cases.

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