Tiger Global Ruling: Over 500 Foreign Funds in India's F&O Market Face Tax Uncertainty

• The Supreme Court's Tiger Global verdict could significantly impact India's derivative market, affecting over 500 foreign portfolio investors (FPIs) active in F&O.
• The court ruled Tiger Global liable for capital gains tax on its Flipkart stake sale, stating its Mauritius structure lacked commercial substance for treaty benefits.
• Previously, a Tax Residency Certificate (TRC) was deemed sufficient for treaty benefits; however, the court now requires commercial substance and actual control in the jurisdiction.
• FPIs contribute about 15% of India's total derivative market volumes, and this ruling introduces uncertainty, potentially leading to increased tax litigation.
• Experts advise FPIs to establish clear commercial substance, maintain documentation of decision-making, expenditure, and staffing in treaty jurisdictions to avoid audit risks.

Why It Matters: Supreme Court's Tiger Global ruling creates tax uncertainty for over 500 foreign funds in India's F&O market.