Foreign investors and private equity firms operating in India are making anxious calls to advisers and lawyers after a Supreme Court ruling earlier this month strengthened the government's hand in tax disputes. On January 15, India's top court ruled that US investment firm Tiger Global must pay tax in India on the sale of its stake in e-commerce giant Flipkart to Walmart in 2018. The ruling overturned a previous decision that had allowed Tiger Global to claim tax relief based on the India-Mauritius tax treaty. This decision sets out a tougher interpretation of such treaties and permits authorities to deny treaty benefits if investment structures are seen as lacking substance. The ruling has sparked concerns about future sales of investments for private equity and could significantly affect the business environment, potentially causing investors to reassess their strategies.
India's Supreme Court Ruling Shakes Investor Confidence
India's Supreme Court Ruling Shakes Investor Confidence
A recent ruling by India's Supreme Court has raised alarms among foreign investors, linking a 2018 deal involving Tiger Global and Flipkart to potential tax liabilities in India. The decision could reshape how foreign investments are handled.
Foreign investors in India are on edge after the Supreme Court ruled that Tiger Global must pay taxes on its 2018 Flipkart sale to Walmart. This judgment marks a shift in how tax treaties are interpreted, allowing authorities more scrutiny over offshore corporate deals. Experts warn that this could unsettle investor sentiment and impact future investments, as concerns arise over the potential for retroactive scrutiny on older transactions that were previously considered settled.
