Private Equity giant Tiger Global is all set to move to court after Authority of Advance Ruling (ARR) rejected its tax relief application over its Rs 14,500 crore stake sale in Flipkart. Economic Times (ET) first reported this news. According to ET, Tiger Global is now seriously mulling to challenge ARR’s decision in the Delhi high court.
The Private Equity giant is taking legal advice from slew of legal firms including the Mumbai based Nishith Desai Associates on this matter. Tiger Global has so far declined to comment on this issue.
The genesis of this tax fiasco was laid in May, 2018 when Walmart bought majority stake in Flipkart for $16 Bn. As part of this deal, Tiger Global sold its 17% stake in Flipkart to Walmart for Rs 14,500 crore and thereby made a giant killing by exiting with enormously profitable amount. Tiger Global along with Accel was one of the earliest backers of Flipkart. The private equity company reportedly still owns 5% stake in the Bengaluru headquartered e-commerce firm.
While rejecting Tiger Global’s application for tax relief, ARR argued that the private equity major was seeking tax relief through its Mauritius entity. But the ‘head and brain’ of the company was still operating from U.S, ARR further argued.
It must be noted that India and Mauritius many years back had signed India- Mauritius Double Tax Avoidance Agreement (DTAA). However, this treaty is now leading to major tax revenue loss for the Indian government since the treaty is being allegedly subjected to repeated misuse by foreign investors.
Tiger Global is one of the most prolific investors in India’s startup industry. Earlier this year, it raised a funding corpus of whopping $3.8 Bn, with substantial part of this funding corpus is likely to be invested in emerging economies including India.
Some of Tiger Global’s top investment in India includes NoBroker, Upstox, IndWealth, Zenoti, Locus, Moglix, Ninjacart and OkCredit.
