India's Supreme Court has ruled against Tiger Global in a tax dispute linked to Walmart's $16 billion acquisition of Flipkart in 2018, potentially reshaping how global funds structure investments in the rapidly expanding Indian market. The court's decision bolsters New Delhi's ability to scrutinize offshore treaty structures, a move that could introduce increased tax risks for international investors seeking predictable returns.

The case revolved around whether Tiger Global could leverage its Mauritius-based entities to claim protection under the India-Mauritius tax treaty, thereby avoiding capital gains tax in India on profits generated from its Flipkart exit. The Supreme Court's ruling effectively overturned a Delhi High Court decision from earlier this year, which had favored Tiger Global. This reversed a 2020 order by the Authority for Advance Rulings, which initially determined that the firm was prima facie engaged in tax avoidance and ineligible for treaty relief.

The verdict is being closely monitored by global investors as it signals a more assertive stance by Indian tax authorities on offshore treaty-routing structures. These structures have historically been used to minimize tax liabilities on high-value exits from Indian investments. The ruling introduces uncertainty regarding the structuring and pricing of future cross-border deals, particularly at a time when foreign funds are increasingly reliant on India for growth and returns.

Tiger Global, a prominent global investment firm, was an early backer of Flipkart, an Indian e-commerce giant that was acquired by Walmart in 2018 in one of the largest deals in the Indian internet sector. The deal provided significant returns for early investors like Tiger Global, but also triggered complex tax implications due to the cross-border nature of the transaction and the use of offshore investment vehicles.

Looking ahead, the ruling could prompt a re-evaluation of investment strategies and tax planning approaches by global funds operating in India. It may also encourage other multinational corporations to reassess their existing structures to ensure compliance with evolving Indian tax regulations. The decision could lead to increased scrutiny of similar offshore structures and potentially higher tax liabilities for foreign investors exiting Indian investments.