India Must Preserve Tax Sovereignty While Entering International Treaties: Supreme Court Proposes Safeguards https://www.verdictum.in/court-updates/supreme-court/the-authority-for-advance-rulings-income-tax-others-v-tiger-global-international-holdings-2026-insc-60-1604652
[17/01, 11:02] Sekarreporter: India Must Preserve Tax Sovereignty While Entering International Treaties: Supreme Court Proposes Safeguards
https://www.verdictum.in/court-updates/supreme-court/the-authority-for-advance-rulings-income-tax-others-v-tiger-global-international-holdings-2026-insc-60-1604652
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[17/01, 11:02] Meta AI: The Supreme Court has emphasized that India must preserve its tax sovereignty while entering into international treaties, proposing safeguards to prevent treaty abuse. The court ruled that tax treaties shouldn’t be used to legitimize unlawful structures, and authorities can examine who controls a company and whether a structure is designed for tax avoidance. ¹ ² ³
Key safeguards suggested by Justice J.B. Pardiwala include:
– *Limitation of Benefits (LOB) clauses* to prevent treaty shopping
– *GAAR override* to deny benefits to tax-avoidance structures
– *Source-based taxation rights* for capital gains, royalties, interest, and business profits
– *Tax credit* instead of full exemption to avoid double non-taxation
– *Exit and renegotiation clauses* in treaties
– *Clear Permanent Establishment rules*
The ruling stems from the Tiger Global case, where the Supreme Court held that the company’s Mauritian entities were conduit entities with no real business substance, and the real decision-making was in the US. The court emphasized that taxing income arising from India is an inherent sovereign right, and any dilution of this right threatens national interest. ⁴
Would you like to know more about the implications of this ruling on foreign investors or the specific case of Tiger Global?
