Govt exempts General Anti-Avoidance Rule on foreign invest made till FY17
This story was originally published at 13:43 IST on 2 April 2026
Register to read our real-time news.Informist, Thursday, Apr. 2, 2026
NEW DELHI – The government Wednesday clarified that foreign investments made prior to Apr. 1, 2017, would not be subject to General Anti-Avoidance Rule of the tax department. That is, the tax department cannot deny benefit to foreign entities, which made investments before the onset of 2017-18 (Apr-Mar) primarily to save taxes. The department cannot impose extra taxes either on exit of such entities.
The government had implemented General Anti-Avoidance Rule on Apr. 1, 2017. The rule allows tax authorities to deny tax benefits for "impermissible avoidance arrangements". It targets complex arrangements set up by foreign companies to primarily save tax. The rule aims to ensure foreign firms pay their fair share of taxes on the income earned on their investments in India.
The clarification follows the Supreme Court's verdict on Tiger Global International III Holdings and related entities in January. The top court ruled that Tiger Global was not entitled to an exemption from capital gains tax in the sale of their stake in Flipkart Singapore to Walmart Inc. for over INR 145 billion in 2018.
Tiger Global and related entities had claimed that gains from the transfer of stake were exempt from taxation as Article 13(3A) of the India-Mauritius Double Tax Avoidance Agreement "grandfathered" all acquisitions of shares before Apr. 1, 2017. Tiger Global and its related entities had sought an exemption from capital gains tax on the basis that they had acquired Flipkart Singapore's shares before Apr. 1, 2017. They acquired 23.67 million shares of Flipkart Singapore between October 2011 and April 2015. In 2018, Tiger Global and its affiliated entities sold their stakes in Flipkart Singapore to Walmart.
Meanwhile, the Supreme Court held that Tiger Global's sale of its stake in Flipkart was primarily done to avail the capital gains tax exemption benefit under the India-Mauritius treaty. The court said Tiger Global's arrangement was a tax avoidance set-up. End
Reported by Krity Ambey
Edited by Akul Nishant Akhoury
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2026. All rights reserved.
To read more please subscribe
Share this Story:
