January 23, 2026: The Supreme Court’s recent verdict on Tiger Global has sent a chill through India’s startup ecosystem, leaving founders and investors navigating a sudden landscape of tax uncertainty. In a swift response to the landmark ruling, a coalition of 60 prominent Indian startups, represented by the Startup Policy Forum, formally petitioned the Finance Ministry on January 20.
The group is urging New Delhi to issue an immediate clarification on the tax status of historic foreign investments, amid growing fears that the decision could trigger a wave of retroactive audits on capital inflows once thought to be protected.
The legal tension stems from the court’s decision regarding Tiger Global’s 2018 sale of its Flipkart stake to Walmart. The bench concluded that the investment firms based in Mauritius functioned as “conduits” designed primarily to bypass domestic tax obligations. This judgment effectively allows Indian tax authorities to look past treaty benefits if they determine a corporate structure lacks genuine commercial substance.
Industry leaders, including representatives from Swiggy, Acko, and Meesho, argue that this shift in legal interpretation creates unpredictability for global funds. Between 2000 and 2023, Mauritius accounted for approximately $171 billion in foreign direct investment into India, representing one-quarter of the country’s total inflows. The startup group is now seeking a written guarantee that investments made before April 2017 will remain protected under previous tax exemptions.
Assessing the Impact on Capital Inflow and Treaty Stability Post Tiger Global Tax Verdict
The core of the dispute rests on whether the General Anti-Avoidance Rules (GAAR) can override long-standing international treaties. While the government previously suggested that investments made before the 2017 treaty amendment would be “grandfathered”, meaning they would be exempt from newer, stricter tax laws, the Supreme Court’s focus on the “substance” of a company suggests that legacy structures are no longer immune to scrutiny.
Additional Solicitor General N. Venkataraman recently sought to minimize these concerns, stating that the ruling is a specific legal outcome rather than a broad threat to foreign capital. He categorized the current market anxiety as a distraction from the legal facts of the case. However, tax practitioners note that the verdict changes the requirements for offshore funds, who must now prove that their offices in treaty jurisdictions like Mauritius have actual staff and independent decision-making power.
The Finance Ministry has not yet issued a formal response to the startups‘ request. For now, the investment community is monitoring whether the government will prioritize tax collection from past deals or provide the regulatory certainty requested by the tech sector to maintain future funding rounds.
