Introduction
On 15 January 2026, the Supreme Court of India delivered a judgment, reported as 2026 INSC 60, that has reset expectations for anyone using a Mauritius entity to invest into India. The Court declined to grant capital gains tax relief under the India-Mauritius Double Taxation Avoidance Agreement (DTAA) to a group of Mauritius-incorporated entities in the Tiger Global structure, holding that a Tax Residency Certificate is necessary but not conclusive proof of treaty entitlement, and that the General Anti-Avoidance Rule can reach an arrangement even where the underlying investment predates the rule. For two decades, the prevailing understanding was that a Mauritius residency certificate, supported by Circular No. 789 of 2000, was close to a guarantee of treaty access. That understanding no longer holds in the same way.
This advisory note explains what the Court actually decided, why the facts of the Flipkart exit mattered, and how the decision sits alongside the 2024 Protocol that inserted a Principal Purpose Test into the treaty. It is written for international businesses, fund sponsors, family offices, and advisers who hold or are contemplating Mauritius structures with Indian exposure, and for anyone weighing Mauritius against other holding jurisdictions. The aim is practical: to separate what changed from what did not, and to set out the steps that protect a structure when substance, not paperwork, decides the outcome.
The Case in Brief: Tiger Global and the Flipkart Exit
The dispute arose from one of the largest technology exits in Indian history. In 2018, Walmart acquired a controlling stake in the Flipkart group for a reported sum of around US$16 billion. Tiger Global, investing through Mauritius-incorporated entities, used that event to realise a partial exit, with gains reported at approximately US$1.6 billion. The Mauritius entities claimed that those capital gains were exempt from Indian tax under the India-Mauritius treaty.
The Indian Authority for Advance Rulings declined to grant the relief, and the matter travelled to the Supreme Court. The Court's conclusion was that the entities were not entitled to the treaty exemption they claimed. Several strands of reasoning combined to produce that result, and each strand carries lessons that extend well beyond Tiger Global.
- The Tax Residency Certificate was not treated as conclusive. The Court accepted that the certificate is a necessary document but held that it does not foreclose an inquiry into the substance and purpose of the structure.
- The shares sold were in a Singapore-incorporated company, not an Indian company, although their value derived from Indian assets. The authorities characterised this as an indirect transfer of Indian assets, which affected how the grandfathering provisions were read.
- The General Anti-Avoidance Rule was held capable of applying to the arrangement, notwithstanding that the investment was made before the rule's commencement.
What the decision is, and is not
The Tiger Global judgment does not abolish the India-Mauritius treaty, repeal grandfathering, or make every Mauritius structure taxable in India. It holds that a residency certificate is not the end of the inquiry and that anti-avoidance rules can reach arrangements lacking genuine purpose. The exposure of any given structure turns on its facts, not on a blanket new rule.
Why the Tax Residency Certificate Is No Longer Decisive
For years, the working assumption among investors was simple. A Mauritius company that held a valid Tax Residency Certificate (TRC) could claim treaty benefits on Indian-source capital gains, and the Indian authorities would respect the certificate. That assumption rested heavily on Circular No. 789 of 2000, issued by the Central Board of Direct Taxes, which stated that a residence certificate issued by the Mauritian authorities would constitute sufficient evidence of residence and beneficial ownership for the treaty.
The Old Position
The circular was upheld in earlier litigation and became the bedrock of Mauritius-India structuring. In practice it meant that a TRC operated almost as a passport: present it, and treaty relief followed. This certainty was, for many years, precisely the point of routing investment through Mauritius.
What Tiger Global Changed
The Court in 2026 confirmed a more demanding reading. A TRC is necessary, but it is not conclusive or binding evidence of residence and beneficial ownership. Circular No. 789 does not bar the tax authorities from looking behind the certificate to examine the real nature of the entity's residence and the substance of the transaction. In other words, the certificate opens the door to the treaty, but it does not guarantee that the door stays open once the substance of the arrangement is examined.
| Aspect | Position before Tiger Global | Position after Tiger Global |
|---|---|---|
| Status of the TRC | Treated as close to conclusive | Necessary but not conclusive |
| Role of Circular No. 789 | Read as making the TRC sufficient | Does not bar inquiry into substance and purpose |
| Authorities' inquiry | Limited where a TRC was held | Can look behind the certificate |
| Decisive factor | Holding the certificate | Substance, beneficial ownership, and purpose |
A certificate is evidence, not immunity
Holding a current Tax Residency Certificate remains essential, and a structure without one is in a far weaker position. But treat the certificate as the floor, not the ceiling. The authorities can and now will ask who really controls the entity, why it exists, and whether the arrangement has a genuine commercial purpose beyond accessing the treaty.
GAAR, Grandfathering, and the Investment Versus Arrangement Distinction
One of the most consequential parts of the judgment concerns how the General Anti-Avoidance Rule interacts with the protection that older Mauritius investments were thought to enjoy.
The Grandfathering Background
A 2016 Protocol to the treaty gave India the right to tax capital gains on shares acquired on or after 1 April 2017, while expressly grandfathering investments in shares acquired before that date. Gains on those older shares were intended to remain exempt. For a large body of pre-2017 Mauritius investment into India, grandfathering was the comfort that justified the structure.
The Distinction the Court Drew
The Court distinguished between an investment and an arrangement. Grandfathering protects a qualifying investment made before 1 April 2017. It does not automatically protect the wider arrangement from anti-avoidance scrutiny. GAAR applies to any arrangement that produces a tax benefit on or after 1 April 2017, even where the investment that sits inside the arrangement predates that date. The trigger for GAAR is the timing of the tax benefit, not the timing of the original investment.
This is the pivot of the case. An investor could hold genuinely grandfathered shares and still face GAAR if the benefit is realised through an arrangement that the authorities consider lacking in commercial substance and designed to avoid tax.
Grandfathering protects the investment, not necessarily the exit
The date that matters for GAAR is when the tax benefit arises, not when the shares were bought. A pre-April 2017 investment can still sit inside a post-April 2017 arrangement that GAAR can examine. Do not assume that an old acquisition date alone insulates an exit.
The Indirect Transfer Dimension
A specific feature of the Tiger Global facts deserves attention because it recurs in many real structures. The shares that were sold were in a company incorporated in Singapore, not in an Indian company. However, the value of those shares derived substantially from assets located in India. Indian law treats the transfer of shares that derive their value substantially from Indian assets as an indirect transfer of Indian assets, which can bring the gain within the Indian tax net.
This mattered to the grandfathering analysis. The grandfathering provisions are framed around shares of Indian companies. Where the asset sold is a foreign company whose value is Indian in substance, the protection may not map neatly onto the transaction. Investors who layer holding companies across multiple jurisdictions should understand that the legal form of the share being sold and the source of its value can pull in different directions, and the authorities will look at the substance.
The 2024 Protocol and the Principal Purpose Test
Tiger Global did not arrive in isolation. The treaty framework had already tightened before the judgment, and that tightening will shape future disputes more than the case itself.
What the 2024 Protocol Does
On 7 March 2024, India and Mauritius signed a Protocol that inserts a Principal Purpose Test (PPT) into the treaty, aligned with the OECD Multilateral Instrument (MLI). The Protocol also revised the treaty preamble to make clear that the treaty is not intended to create opportunities for non-taxation or reduced taxation through treaty shopping, including by residents of third countries.
The Principal Purpose Test denies a treaty benefit where it is reasonable to conclude that obtaining that benefit was one of the principal purposes of an arrangement or transaction, unless granting the benefit would accord with the object and purpose of the relevant treaty provisions. It is a purpose-based filter that sits on top of the treaty.
How the PPT and GAAR Relate
The PPT and GAAR are distinct but pointed in the same direction. GAAR is a domestic anti-avoidance rule. The PPT is a treaty-level standard. An arrangement could in principle pass one and fail the other, so investors should test a structure against both. Indian guidance has indicated that the PPT applies prospectively from the entry into force of the amending Protocol, and that genuinely grandfathered transactions are intended to remain governed by the specific terms of the treaty rather than being reopened by the PPT.
| Tool | Source | Trigger | Timing |
|---|---|---|---|
| Grandfathering | 2016 Protocol | Shares acquired before 1 April 2017 | Protects qualifying pre-2017 investments |
| GAAR | Indian domestic law | Tax benefit arising on or after 1 April 2017 | Applies to arrangements, by benefit date |
| Principal Purpose Test | 2024 Protocol, MLI-aligned | Obtaining treaty benefit a principal purpose | Prospective from Protocol entry into force |
Test every exit against three questions
Before any India-related disposal through a Mauritius or Singapore entity, ask: Is the underlying investment grandfathered? Could GAAR treat the exit as an arrangement designed to obtain a tax benefit? Would the Principal Purpose Test deny relief because treaty access was a principal purpose? A structure should have a defensible answer to all three.
What This Means for Mauritius as a Holding Jurisdiction
It would be wrong to read Tiger Global as the end of Mauritius as a route into India, and equally wrong to ignore how the bar has moved. Mauritius remains a credible, well-regulated jurisdiction with a developed financial services sector, a network of treaties, and a recognised legal system. What has changed is that the value of a Mauritius structure now depends on genuine substance and purpose rather than on the treaty alone.
Mauritius Still Offers Real Advantages
- A stable, common-law-influenced legal environment and an established financial services regulator.
- A broad treaty network and membership of relevant international cooperation frameworks.
- A mature ecosystem of administrators, directors, banks, and professional advisers.
- Continued treaty access where structures carry real substance and commercial rationale.
But the Substance Bar Has Risen
- Board control and key decision-making must genuinely sit in Mauritius, not merely on paper.
- The entity should have a commercial purpose beyond accessing the treaty.
- Beneficial ownership and the flow of decision-making must withstand scrutiny.
- Documentation of meetings, decisions, and rationale must be contemporaneous and credible.
For businesses weighing where to hold investments, the lesson generalises. The choice of holding jurisdiction should follow the commercial logic of the structure, supported by substance, rather than being driven by a treaty rate alone. AURNÉ advises clients on jurisdiction selection across our company formation services, including Mauritius, and on building structures that are defensible because they are real.
Practical Implications for Existing Structures
If you hold a Mauritius entity with Indian exposure, the decision calls for a measured review rather than panic. The steps below help you understand where a structure stands and what to strengthen.
1. Confirm the Substance Position
Establish where decisions are genuinely taken and by whom.
- Board composition and control: Confirm that directors based in Mauritius exercise real authority over investment and disposal decisions.
- Decision records: Verify that board minutes reflect genuine deliberation, not the rubber-stamping of decisions taken elsewhere.
- Operational footprint: Assess whether the entity has the people, premises, and activity consistent with its claimed residence.
2. Map the Timing of Investments and Benefits
Separate the investment date from the date any tax benefit would arise.
- For pre-April 2017 investments: Confirm grandfathering eligibility on the facts, and recognise that grandfathering protects the investment, not automatically the arrangement.
- For post-April 2017 investments: Plan on the basis that GAAR and the Principal Purpose Test are live considerations.
- For planned exits: Model the tax position before transacting, not after.
3. Maintain Documentary Readiness
Keep the evidence that supports a treaty claim current and complete.
- A valid and current Tax Residency Certificate.
- Evidence of commercial purpose and substance, kept contemporaneously.
- A clear record of beneficial ownership and the rationale for the structure.
Is your Mauritius or cross-border structure built to withstand a substance inquiry?
AURNÉ reviews holding structures against current anti-avoidance standards, strengthens substance and governance, and advises on jurisdiction selection for international investment. We help you build structures that are defensible because they are genuine.
Implications Beyond Mauritius and Beyond India
The reasoning in Tiger Global is not confined to one treaty or one jurisdiction. Its themes, substance over form, beneficial ownership, and purpose, are the same themes driving tax administration globally.
For Singapore Special Purpose Vehicles
Structures routed through Singapore face the same core questions. A Singapore entity holding Indian assets must be able to demonstrate genuine substance and a commercial purpose beyond treaty access. The indirect transfer point in Tiger Global, where the shares sold were of a Singapore company deriving value from India, is directly relevant to Singapore-layered structures. The India-Singapore treaty has its own capital gains history, but the substance-based direction of travel applies across the board.
For Other Holding Jurisdictions
Investors using jurisdictions such as the Cayman Islands or the British Virgin Islands for fund and holding structures should note that the global trend is consistent. Economic substance requirements, beneficial ownership transparency, and purpose-based anti-abuse tests now feature across reputable jurisdictions. A structure that works is one where the form matches the underlying commercial reality. AURNÉ supports clients across multiple jurisdictions, including the Cayman Islands and the British Virgin Islands, and helps align each structure with genuine activity. For groups expanding operating footprints rather than purely holding assets, jurisdictions such as Saudi Arabia and our worldwide formation capability widen the options.
A Forward-Looking Checklist
Whether you are reviewing an existing structure or designing a new one, the following items capture the practical priorities after Tiger Global.
- Hold a current Tax Residency Certificate, and treat it as necessary rather than sufficient.
- Build and evidence genuine substance, with real decision-making in the jurisdiction of residence.
- Document commercial purpose, so the structure has a rationale beyond the treaty rate.
- Track investment and benefit dates separately, recognising that GAAR follows the benefit date.
- Test exits against grandfathering, GAAR, and the Principal Purpose Test before transacting.
- Keep beneficial ownership clear and consistent, across every layer of the structure.
- Take advice early, ideally before a transaction rather than during an assessment or dispute.
Common Pitfalls
- Relying on the TRC alone: The certificate is a starting point, not a guarantee, and a thin structure behind it is now exposed.
- Assuming grandfathering covers everything: Grandfathering protects the qualifying investment, not necessarily the arrangement through which the benefit is realised.
- Ignoring the indirect transfer angle: Selling shares of a foreign company whose value is Indian in substance can pull the gain into the Indian net.
- Treating substance as a paperwork exercise: Minutes that record decisions taken elsewhere do not create substance; genuine local control does.
Key Takeaway
After Tiger Global, treaty access depends on substance and purpose, not on a residency certificate. The most resilient structures are the ones where the legal form matches genuine commercial activity, and where every planned exit has been tested against grandfathering, GAAR, and the Principal Purpose Test before it happens.
Conclusion
The Supreme Court's 15 January 2026 judgment in the Tiger Global matter, reported as 2026 INSC 60, marks a decisive moment in how India reads its treaties. The headline is not that the India-Mauritius treaty has been dismantled, because it has not. The headline is that a Tax Residency Certificate, long treated as near-conclusive on the strength of Circular No. 789 of 2000, is now necessary but not sufficient, and that the General Anti-Avoidance Rule can reach an arrangement producing a tax benefit on or after 1 April 2017 even where the underlying investment is older.
These themes are reinforced, not contradicted, by the 2024 Protocol that inserted a Principal Purpose Test aligned with the OECD Multilateral Instrument. Read together, the case and the Protocol point in one direction: substance and commercial purpose now decide treaty access, and they apply not only to Mauritius but to Singapore special purpose vehicles and to holding structures generally. Investors who built structures around a treaty rate alone should review them; investors whose structures reflect genuine activity have far less to fear.
Professional guidance adds the most value before a transaction, when a structure can still be strengthened or reshaped, rather than after an assessment when options narrow and costs rise. AURNÉ works with international businesses, funds, and family offices on jurisdiction selection, substance and governance, and the design of structures that hold up under scrutiny because they are real. Explore our advisory and formation services to discuss how the post-Tiger Global landscape affects your structure, and what to do about it now rather than later.