The Central Board of Direct Taxes (CBDT) has clarified that investments made prior to April 2017 will be exempt from the country’s anti-tax avoidance regulations.
According to a gazette note issued on March 31 by the finance ministry, gains from these earlier investments will not be subject to scrutiny under the stricter rules aimed at preventing aggressive tax planning and evasion.
These provisions are included in the Income Tax (Amendment) Rules, 2026, which took effect on April 1.
The new regulations state:
“The provisions of Chapter XI (general anti-avoidance rules) shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st April, 2017, except for that income which accrues or arises to, or deemed to accrue or arise to, or is received or deemed to be received by, any person from transfer of such investments which were made before the 1st April, 2017.”
This change is expected to provide significant relief to global venture capital (VC) and private equity (PE) firms, alleviating concerns about retrospective taxation in India. These investors can now pursue tax benefits from transactions that occurred before 2017.
This announcement follows a Supreme Court ruling against Tiger Global regarding tax liabilities from its 2018 stake sale in Flipkart. The court determined that Tiger Global was responsible for taxes on capital gains from this transaction, which involved the sale of shares valued at $1.6 billion to Walmart.
The case centered on Tiger Global’s investment through its Mauritius-based entity, which the Indian tax authorities claimed was a mechanism to evade taxes. They argued that the ultimate beneficiary was Tiger Global’s parent company in the US.
In 2016, India revised its Double Taxation Avoidance Agreement (DTAA) with Mauritius, categorizing foreign investments made through Mauritius after April 2017 as tax deductible. Tiger Global contended that its investment fell before this deadline and should be exempt.
While the Authority for Advance Rulings initially denied Tiger Global the DTAA benefits in 2020, the Delhi High Court later overturned this decision in 2024. However, the Supreme Court stayed the High Court's ruling last year and nullified it earlier this year. With the latest amendments, Tiger Global appears to have avoided further tax complications for now.
