How India’s Tiger Global Ruling Collapses Treaty Residence Into an Anti-Abuse Inquiry

Bilateral tax treaties prevent double taxation in several ways. One is by identifying a taxpayer’s residence (“treaty residence”) and reserving taxing rights to that state alone. Anti-abuse rules ask a different question: whether a particular arrangement improperly exploits the benefits that follow from that status.

The Indian Supreme Court unsettled this distinction in Authority for Advance Rulings v. Tiger Global International II Holdings (2026) (“Tiger Global”). The judgment used anti-abuse standards to assess if treaty residence existed. That move transforms a doctrine designed to deny treaty benefits into a requirement for obtaining them.

What Tiger Global Held

The facts were straightforward. A United States private equity fund sought to invest in Flipkart, an Indian e-commerce company. Rather than investing directly, it created holding companies in Mauritius. Those Mauritian companies sat between the US fund and a Singapore company, through which the fund indirectly owned Flipkart.

The tax dispute arose when the Mauritian entities sold their Singapore shares to exit Flipkart. Because Indian law taxes certain offshore share sales linked to valuable Indian assets, the transaction was taxable under the Income Tax Act, 1961 (“Tax Act”). This prompted the taxpayers to claim exemption under the India-Mauritius Double Tax Avoidance Agreement (“DTAA”). Under that treaty, capital gains of a Mauritian resident are not taxable in India.

The taxpayers held valid Mauritian Tax Residency Certificates (“TRCs”), the principal documents used to establish treaty residence. They had also maintained Mauritian directors, offices, and bank accounts for years before the disputed transaction. Nevertheless, the tax authorities challenged their claim to Mauritian treaty residence and denied the exemption. The authorities argued that the entities functioned merely as conduits because they received funds from parent entities while key commercial decisions were allegedly taken outside Mauritius.

The Court approached that challenge through GAAR. Parliament inserted the General Anti-Avoidance Rules (“GAAR”) into the Tax Act in 2017, allowing authorities to deny benefits arising from abusive arrangements. The Court held that GAAR allowed tax authorities to look beyond a TRC and challenge treaty residence itself. It noted that before GAAR entered Indian law, “the Revenue cannot look into the genuineness of residence of a company... based on commercial substance” once a valid TRC was issued. Despite this, it then stated subsequent anti-abuse amendments “took away the supremacy of the DTAA”. The judgment held that “the mere holding of a TRC cannot, by itself, prevent an enquiry” if the tax authority suspects that “the interposed entity was a device to avoid tax”.

In deciding taxpayers’ treaty residence status, the Court examined conduit status, commercial substance, and tax avoidance intent. None of these are treaty residence tests. They are the language of GAAR.

The Court treated a lack of ‘genuine commercial substance’ as a valid reason for ‘challenging the residency claim’ itself.

Treaty Residence and GAAR Perform Different Legal Functions at Different Stages

Residence determines whether a taxpayer may invoke treaty protection at all. Article 4 of the India-Mauritius DTAA determines who qualifies as a treaty resident. Like most treaties, it looks to the domestic law of the state whose residence is claimed. Here, that means Mauritian law.

GAAR addresses a different issue. It targets arrangements rather than persons. It asks whether arrangements lack commercial substance, not whether the taxpayer is resident. Section 97 of the Tax Act identifies arrangements lacking commercial substance, including round-tripping, value-disguising, and risk-neutralising structures. Each focuses on the arrangement itself, not on who the taxpayer is or where they reside.

They also apply sequentially. Residence comes first. Only then can GAAR deny the resulting benefit. Section 90(2A) of the Tax Act establishes this sequence. It explains GAAR’s interaction with treaties: GAAR applies “notwithstanding anything contained in a tax treaty”. The provision therefore contemplates a fixed flow. Treaty entitlement is determined first. GAAR may then deny that benefit if the arrangement is abusive. Otherwise, there would be no treaty benefit to override.

Together, they form a framework with two elements: distinct legal functions and a fixed sequence.

The legal framework that existed before Tiger Global

The pre-Tiger Global authorities reflected this framework. Vodafone International Holdings B.V. v. Union of India (2012) (“Vodafone”) confirms that the two inquiries must remain distinct. Vodafone was decided under the judicial anti-avoidance rule (“JAAR”), a judge-made doctrine that predated GAAR. It held residence cannot be displaced by substance-based arguments. The Court reasoned that anti-avoidance scrutiny concerns the transaction, not the taxpayer. To hold otherwise would allow tax authorities to recharacterize the taxpayer, collapsing the distinction between denying a benefit and erasing an entity.

It further reasoned that residence is an existential state, not an operational one. Residence attaches to the legal entity regardless of what that entity does.

Crucially, Union of India v. Azadi Bachao Andolan (2003) (“Azadi”) rejects an attempt to import the ‘place of effective management’ test into the general residence definition. That treaty test is a tie-breaker confined to cases where a taxpayer is simultaneously resident in both contracting states. Because it operates only at that later conflict-resolution stage, it cannot affect the prior determination of residence under Article 4. If one treaty concept could not migrate within the same treaty, a domestic anti-abuse standard has even less basis for being read into Article 4.

Azadi equally establishes the sequencing logic of treaty residence. The Supreme Court treated residence as a strict treaty question. It concerned itself with how treaty entitlement under Article 4 is invoked. The legal system must first identify whether the treaty applies to the person, because anti-abuse rules regulate only the use of an already-available treaty entitlement, not its creation.

Azadi thus leaves tax avoidance to downstream anti-abuse review.

Tiger Global removes both the sequencing constraint in Azadi and the identity constraint in Vodafone and Azadi, which together insulated treaty residence from GAAR logic.

Tiger Global Reverses the Legal Sequence

Tiger Global upends the order in which treaty rules and anti-abuse law operate. Where domestic GAAR overrides treaty provisions, there are only two logically coherent ways for it to interact with treaty residence. It can determine treaty entitlement first and then apply GAAR to deny the benefit. Or it can invoke GAAR directly. If GAAR applies, the benefit is denied regardless of residence. Treaty invocation therefore becomes redundant. Tiger Global follows neither path. It places anti-abuse review before the very treaty inquiry that anti-abuse review is supposed to override.

The reversal becomes clearer through a simple analogy. A driver’s license determines whether a person may lawfully drive. A roadside inspection determines whether that driver has complied with traffic rules. Under Tiger Global’s logic, failure of the inspection becomes evidence that the license never existed in the first place. A rule designed to police conduct becomes part of how you qualify for the license. That is the inversion: Tiger Global allows a later anti-abuse inquiry to displace the initial residence determination.

Tiger Global Merges What Must Remain Separate

Treaty residence asks one question: which state is the taxpayer legally connected to? The answer turns on objective criteria such as place of incorporation. Commercial substance plays no role. Tiger Global nevertheless treats it as relevant, even though neither Article 4 nor ordinary residence rules make residence contingent upon it.

Where Vodafone kept the two inquiries strictly apart, Tiger Global fuses them. Tiger Global itself treats GAAR as a codification of the judicial anti-avoidance rule that preceded it. If JAAR could not displace residence in Vodafone, GAAR cannot either. But Tiger Global did exactly that.

Once that line is crossed, a fixed status becomes a variable one. Treaty residence cannot mean different things depending on what a taxpayer has done.

Consider a company that domestic law has treated as a resident of State A for years. Over its life it may enter dozens of arrangements: financing deals, supply contracts, licensing agreements. If one of those arrangements is abusive, the tax authority may deny the treaty benefit associated with it. What it cannot do is use that finding to declare that the company was never a resident of State A in the first place. Years of legal residence do not disappear because one arrangement allegedly lacks commercial substance.

Closing Remarks

Tiger Global does more than expand the reach of anti-abuse review. It reverses the sequence contemplated by both the treaty and the Tax Act, introduces considerations that Article 4 does not require, and departs from the separation maintained in Azadi and Vodafone. The cumulative effect is significant. Bilateral treaty residence has become a unilateral determination. When one treaty partner can revise residence criteria unilaterally, the bilateral deal underpinning cross-border investment planning disappears.

Businesses could plan around GAAR. They cannot plan around a substance requirement imposed at the residence stage itself. Businesses face a choice between over-investing in substance to satisfy an undefined standard and accepting that treaty benefits cannot be priced with confidence. Neither is a sound basis for cross-border investment planning. That is the real cost of Tiger Global.