Tiger Global suffered a setback in India as the Supreme Court ruled against the firm in a tax dispute related to its exit from Flipkart during Walmart's 2018 acquisition. The decision empowers New Delhi to scrutinize offshore treaty structures, potentially increasing tax risks for global funds anticipating predictable exits from the rapidly expanding Indian market.

The legal battle centered on whether Tiger Global could utilize its Mauritius-based entities to claim protection under the India-Mauritius tax treaty. This treaty, designed to prevent double taxation, had been a popular route for foreign investors to minimize capital gains tax in India. The Supreme Court's ruling overturned a previous decision by the Delhi High Court, siding with tax authorities who argued that Tiger Global was primarily avoiding tax and thus ineligible for treaty relief. The specific amount of tax at stake in this case was not disclosed, but the implications extend far beyond a single transaction.

The verdict is expected to have a significant impact on the structuring of cross-border deals involving Indian assets. For years, foreign funds have relied on tax treaties to optimize returns on their investments in India. This ruling introduces uncertainty and could force investors to reassess their strategies, potentially impacting deal valuations and the overall flow of foreign capital into the country. India has become an increasingly attractive destination for global investors, drawn by its burgeoning consumer market and technological innovation. However, this decision signals a more assertive stance by Indian tax authorities on offshore structures.

Tiger Global, a prominent global investment firm, has been a significant player in the Indian startup ecosystem, backing numerous high-growth companies. The firm's investment strategy often involves early-stage investments followed by exits through acquisitions or initial public offerings. The Walmart-Flipkart deal, one of India's largest corporate transactions, provided a substantial return for Tiger Global.

Looking ahead, the Supreme Court's decision could trigger a wave of scrutiny on similar offshore structures used by other foreign investors in India. It may also prompt a re-evaluation of existing tax treaties between India and other countries. While the long-term consequences remain to be seen, the ruling underscores the growing complexity of navigating India's tax landscape and the need for investors to adopt more robust and transparent tax planning strategies.