Walmart(US:WMT) MINT·2026-01-16 08:57Core Viewpoint - The Supreme Court's ruling on capital gains tax for Tiger Global Management's exit from Flipkart has led to a reassessment among foreign investors regarding tax treaties with jurisdictions like Mauritius, Singapore, and the Netherlands [1][18]. Legal Context - The Supreme Court accepted the tax department's argument that Tiger Global used Mauritius as a conduit for treaty benefits, with actual control in the US [2]. - Justice Pardiwala emphasized national sovereignty in international taxation, indicating that taxation is a core part of a nation's rights [11][12]. Case Background - The case involves Walmart's 2018 acquisition of 77% of Flipkart for approximately $16 billion, with Tiger Global selling part of its stake for about $1.6 billion, while its Mauritius-based companies received around ₹14,440 crore [5][6]. - Tiger Global claimed tax exemption under the India-Mauritius Double Taxation Avoidance Agreement, arguing that investments were made before April 1, 2017 [6]. Supreme Court Ruling - The Supreme Court ruled that Tiger Global is liable for capital gains tax in India, stating that the Mauritian companies were merely conduits without real business substance [8]. - The court clarified that a Tax Residency Certificate does not automatically confer treaty benefits and that arrangements primarily for tax benefits can be scrutinized [9][10]. Justice Pardiwala's Opinion - Justice Pardiwala's separate opinion highlighted the importance of economic independence and warned against external pressures influencing domestic tax policies [12][13]. - He advocated for a dynamic interpretation of tax treaties to align with changing global trade patterns [14]. Future Implications - Justice Pardiwala's opinion may influence future tax treaty negotiations, emphasizing source-based taxation and strong Limitation of Benefits (LOB) clauses [16]. - Suggested safeguards include GAAR overrides, taxing digital economies, and regular treaty reviews to ensure alignment with domestic laws [17]. Investor Impact - The ruling indicates a tougher, substance-based approach to taxation, reinforcing India's tax sovereignty in cross-border transactions, which may affect foreign investors, private equity, and venture capital funds [18].