Indian startups are urging the government to provide clear guidance on taxation following a recent Supreme Court ruling that has unsettled investors. The court found that certain Mauritius based entities used in high profile transactions to avoid capital gains tax could be taxed in India. This decision has raised concerns about retroactive tax liabilities for older investments.
A coalition of around sixty startups including Meesho Acko and Swiggy has written to the finance ministry requesting certainty on how the ruling will be applied. They warn that ambiguity could weaken investor confidence and affect future funding for early stage companies. Many foreign investors used Mauritius as a conduit for investments due to the tax treaty between the two countries. The ruling now casts doubt on these structures even for past deals.
The startups highlight that without clear tax guidance investment in India could slow down. Funds are reconsidering their exit strategies and holding structures amid fears that domestic anti avoidance rules might override treaty protections. The government has not issued a formal response to the request for clarity. Officials have suggested that the concerns may be overstated but startups remain anxious about the potential impact on funding and growth.
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