SC Tightens Tax Net on Offshore Investments: Tiger Global Case Reshapes Treaty Benefits

• The Supreme Court ruled that Tiger Global's share sale via Mauritius was impermissible tax avoidance, denying DTAA capital gains exemption.
• The judgment emphasizes economic substance over legal form, stating treaty benefits are for genuine entities, not conduit companies.
• It clarifies that a Tax Residency Certificate (TRC) is not conclusive evidence; Indian tax authorities can still examine arrangements for tax avoidance.
• The ruling has implications for General Anti-Avoidance Rules (GAAR), grandfathered investments, and could extend to other treaties like India–Singapore DTAA.
• The verdict signals a stricter approach for private equity and venture capital, requiring demonstrable economic substance in treaty jurisdictions.

Why It Matters: Supreme Court's Tiger Global ruling tightens tax avoidance rules, prioritizing economic substance over legal form for treaty benefits.