Sudhir Kapadia, Tax Expert, and Himanshu Sinha, Partner-Tax Practice at Trilegal believe that clarity from the government is now crucial.
Kapadia, said the judgement needs to be read carefully and in a narrow factual context. According to him, the case relates specifically to indirect transfers, where investments are routed through layered holding structures. He underlined that this is distinct from foreign portfolio investors (FPIs) or direct investors from treaty jurisdictions such as Mauritius or Singapore who invest straight into Indian entities and are registered with SEBI.
Kapadia also pointed out that the principle applied by the court — that tax benefits cannot be claimed purely on legal form without economic substance — is not new.
He noted that Indian courts have followed anti-avoidance doctrines for decades, long before concepts like the principal purpose test came into global tax discussions. However, he stressed that the bigger concern now is ensuring certainty for investors who relied on explicit grandfathering provisions.
He highlighted that when India reintroduced long-term capital gains tax in 2018 and amended the India–Mauritius tax treaty in 2017, investments made before April 1, 2017 were clearly protected. Successive government circulars, including those issued as late as 2025, reiterated that such grandfathered investments would remain immune from tax, irrespective of later international developments.
Kapadia said it is now critical for the government to reiterate this position to tax officers to prevent fresh notices and prolonged litigation.
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Sinha, took a sharper view, describing the Supreme Court ruling as largely unexpected and disruptive. He said the decision marks a significant shift in India’s tax treaty jurisprudence as it allows tax authorities to look past administrative assurances and reassess the commercial substance of long-standing investment structures.
Sinha warned that the ruling weakens the confidence foreign private equity investors placed in statutory and administrative commitments made by the government, especially for investments made prior to April 2017.
In his view, this substantially increases litigation risk for legacy structures and could unsettle investors who believed their positions were fully protected.
Sinha added that the judgement may not be the final word. Tiger Global still has legal remedies available, including review and curative petitions.
Beyond that, several similar cases are already in the appellate pipeline, and taxpayers could seek a hearing before a larger bench of the Supreme Court, given the wider implications for tax certainty and foreign investment sentiment.
Sinha said the government could step in with clarifications through rule amendments as well as explicit assurances to foreign investors, which could help reduce—if not fully eliminate—the uncertainty triggered by the verdict.
