With the Supreme Court ruling against Tiger Global clearing the way for tax recovery, the Income Tax Department is set to resume reassessment proceedings against the US-based fund, signalling that the recent GAAR rule amendments do not dilute the impact of the judgment.

Tax officials said the March 31 notification issued by the Central Board of Direct Taxes (CBDT), which protects legacy investments made before April 1, 2017, from the ambit of the General Anti-Avoidance Rules (GAAR), does not alter the position in the Tiger Global case. GAAR empowers tax authorities to deny tax benefits arising from arrangements primarily designed to avoid taxes, even if they comply with the letter of the law.

“The notification is not about any specific case. Since the Supreme Court has ruled in favour of the department in Tiger Global, proceedings will continue as per law,” a senior official said, adding that reassessment is expected to be completed soon.

The clarification comes after uncertainty emerged over whether the GAAR amendments, which were widely seen as restoring tax certainty for legacy investments, would affect the Tiger Global dispute.

Officials indicated that recovery may not be limited to the refund already withheld, and additional tax demands could arise following reassessment. When asked specifically whether there would be a demand for an amount over and above the refund withheld, an IT official, who did not wish to be named, did not rule out that possibility. Also, he reiterated that all tax disputes cannot be labelled as overreach or ‘tax terrorism’. “Many disputes arise from genuine differences of interpretation in evolving areas of law. Final certainty emerges only when the highest court settles the issue,” the official told businessline.

On March 31, the CBDT amended Income Tax Rules to explicitly provide that income arising from the transfer of investments made before April 1, 2017, will not be subjected to GAAR, even if exits occur after that date. The move was aimed at ring-fencing legacy private equity and hedge fund investments and reassuring foreign investors after the Supreme Court’s January ruling.

In its judgment, the Supreme Court had held that Tiger Global’s gains from the 2018 sale of its stake in Flipkart were taxable in India, ruling that the transaction constituted an impermissible tax avoidance arrangement and therefore did not qualify for treaty benefits under the India-Mauritius Double Taxation Avoidance Agreement. The ruling effectively allowed the tax department to proceed with recovery of capital gains tax linked to the fund’s estimated gains of over ₹14,500 crore.

Tiger Global had claimed exemption under grandfathering provisions and sought a refund of ₹967.52 crore for assessment year 2019-20, which was withheld by the tax department. While the Delhi High Court had earlier granted relief to the fund, the Supreme Court reversed that decision, holding that GAAR provisions were applicable.

The government, however, has sought to draw a clear distinction between the Tiger Global ruling and the broader relief provided to legacy investors. While the Supreme Court judgment underscores GAAR’s applicability to arrangements lacking commercial substance, the amended rules are intended to protect genuine pre-April 1, 2017 investments from retrospective tax exposure, which offers reassurance to long-term offshore investors even as enforcement proceeds in the Tiger Global case.

Amount withheld

(Refund claimed in return)

Published on April 12, 2026