The Supreme Court has ruled that Tiger Global’s $1.6-billion stake sale in Indian e-commerce giant Flipkart to Walmart is subject to taxes, handing a win to New Delhi in a landmark ruling that will shape future cross-border deals.

Keenly watched by foreign investors, the dispute relates to how the US investment firm used the India–Mauritius tax treaty to claim tax exemptions and Indian authorities’ fierce objections to it.

The ruling will set a precedent for how India applies tax principles and interprets international tax treaties.

In this instant case, three Tiger Global entities based in Mauritius sold shares in Singapore-based Flipkart Private Ltd, which owned assets in India, including Flipkart India, to Walmart Inc in 2018.

Since then, the hedge fund had been locked in a legal tussle with Indian tax authorities for the transaction which was part of Walmart’s $16-billion acquisition of Flipkart.

“In the case at hand, there is clear and convincing prima facie evidence to demonstrate that the arrangement was designed with the sole intent of evading tax, and the assessees have failed to furnish sufficient material to rebut this presumption,” Justice J.B. Pardiwala and R. Mahadevan wrote in the judgment.

The exact amount of tax and penalties Tiger Global now owes, which would depend on how much profit it made from the deal, was not immediately clear.

Tiger Global did not immediately respond to a request for comment by Reuters. The company might ask the Supreme Court to review its verdict, but typically such requests have a low success rate.

“The decision marks a watershed moment in the Indian taxation paradigm,” said Tarun Jain, a lawyer specialising in taxation.

“It will put the onus upon the taxpayers to demonstrably engage only in genuine and bona fide deals, which are not motivated by tax considerations,” he said.

“This is a judgment which is now watched today all over the world, not just domestically,” N. Venkataraman, the government’s top lawyer, said in court following the decision.

Tiger Global had argued that profits from the stake it sold — 17 per cent of Flipkart — were exempted from taxes under the India-Mauritius tax treaty. Indian tax authorities, however, said Tiger Global’s Mauritius units served merely as a conduit for the US parent, and it had improperly used the treaty to avoid paying tax. Tiger Global denied that.

The Supreme Court had been hearing the case since January 2025 as Indian tax authorities challenged a previous Delhi High Court ruling in favour of Tiger Global that found no wrongdoing.

The top court overturned that decision on Thursday, pointing that mere possession of the tax residency certificate of Mauritius, which the Tiger Global entities had, is not sufficient. “In the present case, the respondents seek exemption from the Indian Income tax while, at the same time, contending that the transaction is also exempt under Mauritian law, which runs contrary to the spirit of the DTAA and presents a strong case for the Revenue to deny the benefit as such an arrangement is impermissible,” the bench wrote in the judgment.