Tiger Global’s tax ruling casts pall on India’s buyout sector

Core Viewpoint - The Indian Supreme Court's ruling mandates that Tiger Global must pay capital gains taxes on its sale of Flipkart shares, which could significantly affect private equity firms utilizing offshore entities for investments in India [1][12]. Group 1: Legal and Tax Implications - The ruling has major implications for private equity funds that have established shell entities in offshore havens like Mauritius to channel investments into India, including firms like Blackstone, KKR, and Warburg Pincus [1][12]. - Investors may now need to demonstrate more substance and control within the same jurisdiction to claim treaty benefits, reversing over two decades of tax policy that allowed firms to use Mauritius for tax advantages [1][6]. - The Supreme Court's decision signals the end of the "Mauritius route" as a guaranteed tax shield, impacting private equity investments made before April 2017 that are approaching exits [8][9]. Group 2: Financial Impact - Tiger Global will incur taxes on gains exceeding 145 billion rupees ($1.6 billion) from the Flipkart sales, which were executed in a series of transactions, the latest being in 2023 [4][12]. - Private equity funds injected nearly $50 billion into India over the first 11 months of 2025, indicating strong foreign investment interest despite the new tax challenges [5][12]. Group 3: Future Considerations - Firms will need to reassess existing structures and evaluate risks in light of the ruling, as tax authorities can now challenge the substance of offshore entities [6][10]. - The ruling may also affect Blackstone, which is currently involved in a dispute regarding its use of a tax treaty with Singapore to exempt itself from capital gains [9][12].