Tiger Global Ruling: Is a TRC Enough for Treaty Benefits?

For over two decades, a Tax Residency Certificate (TRC) from Mauritius was viewed by many taxpayers and investors as a reliable gateway to claiming benefits under the India-Mauritius tax treaty. Landmark judgments such as Azadi Bachao Andolan (2003) and Vodafone (2012) reinforced the significance of a TRC, creating a widespread perception that treaty residence, once evidenced through a valid certificate, was unlikely to be challenged.

The Supreme Court's ruling in the Tiger Global case has now altered that understanding.

The judgment sends a clear message that while a TRC remains important, treaty benefits cannot rely solely on documentation. Tax authorities may look beyond the certificate and examine whether an entity possesses genuine commercial substance, effective management and control, and real decision-making authority within the jurisdiction where it claims tax residency.

• A Tax Residency Certificate (TRC) remains important but may not be sufficient on its own to secure treaty benefits.
• Indian tax authorities can examine whether an entity functions as a conduit or pass-through arrangement.
• Grandfathered investments may still face scrutiny under General Anti-Avoidance Rules (GAAR).
• Commercial substance requirements, beneficial ownership of income streams, and effective management and control are becoming increasingly important in treaty entitlement assessments.
• The Tiger Global ruling has implications not only for private equity funds but also for multinational groups making cross-border payments.

What Happened in the Tiger Global Case?

On 15 January 2026, the Supreme Court delivered a significant judgment in the Tiger Global matter arising from the 2018 sale of Flipkart Singapore shares as part of Walmart's acquisition of Flipkart.

The Mauritius entities involved in the transaction claimed exemption from capital gains tax under the India-Mauritius tax treaty. While the Delhi High Court had ruled in favor of the taxpayers, the Supreme Court overturned that decision and restored the view earlier adopted by the Authority for Advance Rulings (AAR).

As a result, the treaty-based capital gains exemption was denied.

Although the dispute arose in the context of a private equity exit, the principles established by the Court extend beyond investment funds and have broader implications for foreign investment structures, treaty entitlement assessments, and cross-border tax compliance.

Why Did the Supreme Court Question the TRC's Significance?

One of the most notable aspects of the judgment is its treatment of the Tax Residency Certificate.

The Court acknowledged that a TRC is a necessary condition for establishing treaty residence. However, it clarified that a TRC is evidence of residence rather than conclusive proof of entitlement to treaty benefits.

This means that tax authorities may still examine whether an entity has genuine economic substance or whether it merely serves as a conduit through which income is routed to another jurisdiction.

For multinational groups and investors, this represents an important shift. The compliance discussion can no longer end with the question, "Do we have a valid TRC?" Instead, taxpayers should be prepared to demonstrate why the entity genuinely qualifies for treaty benefits based on its functions, activities, and commercial purpose.

Can GAAR Override Grandfathered Treaty Benefits?

The judgment also provides important guidance on the interaction between grandfathering provisions and India's General Anti-Avoidance Rules (GAAR).

Many taxpayers took comfort from the fact that investments made before April 2017 were generally grandfathered under the amended India-Mauritius tax treaty. However, the Supreme Court clarified that grandfathering protects investments, not necessarily the arrangements through which tax benefits are obtained.

Where a tax advantage arises after GAAR became effective, authorities may still examine the arrangement to determine whether it lacks commercial substance or was designed primarily to obtain a tax benefit.

This interpretation could influence future disputes involving legacy holding structures that were established before the introduction of India's anti-avoidance framework.

Why Does Management and Control Matter for Treaty Entitlement?

Another key takeaway from the Tiger Global ruling is the importance of management and control.

The Supreme Court closely examined where strategic decisions were actually made and who exercised authority over the entities involved. Based on the facts presented, the Court concluded that effective control appeared to reside outside Mauritius, particularly in the United States.

The judgment also considered factors such as signatory authority over bank accounts and the location of key decision-makers.

This focus on commercial reality reflects a broader global trend. Tax authorities worldwide are increasingly assessing whether entities have genuine decision-making capabilities, local management functions, and sufficient operational substance to support treaty claims.

For businesses relying on offshore holding structures, maintaining robust governance documentation and evidence of local decision-making may become increasingly important.

Why Does the Tiger Global Ruling Affect All Cross-Border Transactions?

It would be a mistake to view this judgment solely as a private equity or capital gains case.

The Court's reasoning has wider implications for any cross-border transaction where treaty benefits are claimed. This includes reduced withholding tax rates on:

• Dividends
• Interest payments
• Royalties
• Technical service fees
• Other treaty-protected income streams

Whenever an Indian company applies a treaty rate, it is effectively relying on the recipient's residence status and entitlement to benefits. Following the Tiger Global ruling, both of these aspects are likely to receive greater scrutiny.

Groups operating through entities in Mauritius, Singapore, the Netherlands, or the UAE may therefore need to revisit whether their existing structures adequately demonstrate commercial substance requirements and beneficial ownership of income streams.

What Should Multinational Companies Do After the Tiger Global Judgment?

The ruling reinforces the importance of building evidence-based tax governance processes rather than relying solely on formal documentation.

Organizations should consider reviewing:

• Commercial substance within treaty jurisdictions
• Board meeting records and governance documentation
• Beneficial ownership of income streams
• Management and control frameworks
• Treaty entitlement assessments
• GAAR exposure for existing structures
• Supporting evidence for cross-border tax positions

Companies that maintain contemporaneous documentation and robust governance processes are likely to be better positioned if their treaty claims are challenged.

The impact of the decision is already being felt. The Delhi Tribunal referred to Tiger Global within weeks of the judgment in the Hareon Solar Singapore matter, suggesting that courts and tax authorities may increasingly rely on the principles established by the Supreme Court.

The Tiger Global ruling does not mean tax treaties have lost their relevance. Rather, it confirms that treaty benefits must now be supported by credible evidence of genuine commercial substance, effective management and control, and economic reality.

FAQs

Does a Tax Residency Certificate guarantee treaty benefits in India?

No. The Tiger Global ruling indicates that a Tax Residency Certificate is an important document but does not automatically guarantee treaty benefits if questions arise regarding commercial substance requirements, beneficial ownership of income streams, or the overall arrangement.

Why is the Tiger Global ruling important?

The ruling confirms that treaty entitlement depends on more than documentation. Tax authorities may examine commercial substance, management and control, and the purpose of the structure before granting treaty benefits.

Can GAAR override grandfathered treaty benefits?

Yes. According to the judgment, grandfathering may protect investments, but arrangements that generate tax benefits after GAAR became effective may still be scrutinized.

How can companies strengthen treaty benefit claims?

Organizations should maintain evidence of local management, board oversight, commercial substance, beneficial ownership of income streams, and business purpose in the jurisdiction claiming treaty benefits.

What does the ruling mean for multinational groups?

Multinational businesses using offshore holding structures or regional headquarters should reassess their structures to ensure they can demonstrate genuine commercial substance and treaty entitlement if challenged by tax authorities.