Tiger Global verdict unlikely to affect foreign investment in India

THE SUPREME COURT'S ruling in favour of the governmentin the Tiger Global case is being misconstrued by sections of commentators, including some tax experts, as a blow to foreign investment, top government sources said on Tuesday.

- PRASANTA SAHU

Thejudgment,theyargued, merely restores the correct application of lawina transaction structured solely to evade taxes in India by misusing the Double Taxation Avoidance Agreement (DTAA) agreement with Mauritius.

In a separate note accompanying the two-judge verdict, Justice JB Pardiwala outlined safeguards that could be considered while negotiating international tax treaties. He suggested that the government explicitly provide fora General Anti-Avoidance Rule (GAAR) override treaties where the primary purpose of an arrangement is tax avoidance, allowing GAAR tobe applied to artificial or contrived transactions. While some experts viewed these remarks as judicial overreach into the executive domain, official sources clarified that the observations are “advisory” in nature.