The SC has gone a step further to state that even if one were to not apply the codified GAAR provisions, the judicial GAAR would continue to apply, point out Pranav Sayta and Bhargav Selarka.
Key Points
- The court ruled that treaty benefits cannot rest on TRC alone
- The transaction was held to be an ‘impermissible avoidance arrangement
- Despite shares being acquired before 1 April 2017, the SC held GAAR applicable since the sale occurred in FY19, when GAAR was in force.
In a judgment delivered on January 15, 2026, the Supreme Court of India in the case of Tiger Global ruled in favour of the Indian Revenue Authorities (IRA) and held that sale of shares of a Singapore-based company (which ultimately held shares of the Indian company) by Tiger Global (based in Mauritius) will be taxable in India.
Key aspects discussed by the apex court
A 'Tax Residency Certificate' (TRC) is not conclusive in establishing treaty eligibility and one needs to examine various other antecedent facts as well.
This seems to re-visit the longstanding SC judgment in case of Azadi Bachao Andolan and other circulars which supported the proposition that a TRC should be sufficient.
The SC has sought to invoke the GAAR provisions (as codified in the domestic tax law) and has ruled the sale of shares of a Singapore company as an 'impermissible avoidance arrangement'.
It must be noted that the view sought to be adopted by Tiger Global was that since the shares of the Singapore company were acquired prior to 1 April 2017, they were grandfathered from the perspective of the GAAR provisions.
The SC struck down this argument on the basis that although the shares were acquired prior to April 1, 2017, since the sale transaction had occurred in financial year 2018-19 (a year where the codified GAAR provisions were in force), GAAR provisions would be applicable.
The SC has gone a step further to state that even if one were to not apply the codified GAAR provisions, the judicial GAAR (i.e. anti-abuse measures laid down by Indian courts in various rulings), would continue to apply.
While the judgment does not mention factual aspects in detail, some key facts around UBOs, bank signatories, etc have been mentioned basis which the lower authorities had arrived at a finding that the control and management of Tiger Global was based outside Mauritius, particularly in the USA.
What was the basis of SC ruling
The SC has focused on various amendments/ provisions introduced in the legislature (related to indirect transfer, GAAR, etc.) post the landmark decision of the SC in case of Vodafone International Holding BV (Vodafone).
It seems that according to the SC, such amendments were aimed at combating the 'look at' approach adopted in the Vodafone decision.
This appears to be the basis of ruling that TRC alone should not be conclusive in establishing treaty eligibility.
Given the various observations in the SC judgment (specifically those around GAAR), foreign investors will have to comprehensively review their past transactions and existing set-up to ensure that they withstand the test of increased scrutiny by the IRA.
This decision is likely to be one of the most consequential tax judgments in India's corporate and international tax landscape.
One can surely not fault the observation of the SC that in case of India, each decade has shown better progressive results from the earlier decade with so much hope and promise to hold geometrical if not astronomical growth in the decades ahead of it.
SC ruling comes at crucial time
However, the ruling does come at a crucial time when India is amidst attracting FDI/FPI flows.
Given the findings of the SC, it is likely to send mixed signals to foreign investors and unsettle various long-settled positions around tax treaty benefits.
It will also be interesting to observe the approach adopted by the IRA on various ongoing tax disputes.
Last but not the least, it is interesting to take note of the concurring opinion of Justice J B Pardiwala where he has emphasised on the principles of 'tax sovereignty'.
He notes that exercising tax sovereignty on the global stage requires thoughtful balance.
It calls for aligning a nation's geopolitical strengths, diplomatic relationships, and investment appeal - while staying firmly committed to its own sovereign interests and the core objectives of its people. When these elements work together, a country can confidently engage with the world without ever compromosing its identity or long-term objectives.
The above opinion of Justice Pardiwala along with the findings of the SC decision in the case of Tiger Global is likely to have a far-reaching impact on international tax jurisprudence and the approach likely to be adopted by Indian courts.
Pranav Sayta and Bhargav Selarka are Partner and National Leader, International Tax and Transaction Services at EY India and Tax Partner at EY India
Feature Presentation: Aslam Hunani/Rediff
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