Flipkart Co-Founder Binny Bansal Faces Tax Denial on $76M Share Transaction
On January 9, 2026, the Income Tax Appellate Tribunal (ITAT) in Bengaluru made a big decision. The tribunal ruled that Flipkart co-founder Binny Bansal does not qualify as a non-resident for Indian tax purposes. Because of this, he was denied tax relief on gains from a large share sale worth about $76 million under the India-Singapore tax treaty.
Bansal had argued that he lived in Singapore and should not pay tax in India on these gains. The tribunal did not accept his claim, saying he spent enough time in India to be treated as a resident.
This ruling matters. It affects not just Bansal. It could change how high-wealth entrepreneurs think about tax and where they live. It also shows how complex cross-border tax rules can be when founders sell big stakes in companies.
Who is Binny Bansal?
Binny Bansal is a well-known Indian entrepreneur. He co-founded Flipkart in 2007, which grew into one of India’s largest e-commerce firms. In 2018, Walmart bought a majority stake in Flipkart in a deal worth around $16 billion.
After that transaction, Bansal stayed with the company for some time before fully exiting in January 2024 to pursue new ventures. His role in India’s tech startup story made him one of the country’s most visible founders. Bansal also became active in Singapore, claiming tax residency there, which later became central in his legal case.
The $76M Share Sale: What Happened with Flipkart?
In the financial year 2019-20, Binny Bansal sold a portion of his Flipkart shares in several transactions. One noteworthy sale involved roughly 600,000 shares to investors like Tiger Global and others, generating gains of about $76 million. In addition to shares of Flipkart Private Limited (a Singapore-incorporated firm), he also sold shares in Indian listed companies during the same period.
Bansal argued that because he lived and worked in Singapore, his tax residency was there, not in India. He claimed this meant he should not pay capital gains tax in India on these transactions and should get benefits under the India-Singapore Double Taxation Avoidance Agreement (DTAA).
Tax Dispute of Bansal: Non-Resident vs Resident Status
What did Bansal argue?
Bansal’s main point was that his stay outside India and employment in Singapore made him a non-resident for tax purposes. He asked the Income Tax Appellate Tribunal (ITAT) to accept this status. Under the India-Singapore DTAA, non-residents can avoid double taxation and sometimes pay tax only in the country of residence.
Tribunal’s Findings on Binny Bansal Tax Denial
On January 9, 2026, the ITAT rejected Binny Bansal’s claim that he was a non-resident. The tribunal found Bansal had spent more than 60 days in India during FY 2019-20, meeting the residential test under Section 6(1)(c) of the Indian Income-tax Act. The bench also noted he had spent over 1,200 days in India in the prior four years, strengthening his resident status.
The ITAT said that the provision Bansal cited for relief applies only if a person was already a non-resident the previous year. Because he was a resident in India before, the claimed relaxation did not apply.
DTAA Tie-Breaker Rule
Bansal also argued that the DTAA’s tie-breaker rules should make him a Singapore resident for tax purposes. The ITAT disagreed, saying the test must consider the entire year, not only the end.
The tribunal weighed factors like permanent home, center of vital interests, habitual abode, and nationality. It found that Bansal’s main economic interests and investments were India-centric. His major assets and high-value properties were in India, and his business ties were stronger in India than in Singapore. This meant his tax residency remained in India, barring him from DTAA benefits.
What does This Ruling on Binny Bansal mean?
This decision is important for wealthy individuals with business ties across countries. It highlights that merely residing in another country or having some foreign ties may not be enough to secure non-resident tax status in India.
For founders who move abroad, the ruling sends a clear message: residence tests are strict and fact-based. Time spent in India, past history of residence, and where economic and personal interests lie will be key determinants.
The tax authorities also argued that allowing Bansal’s claim could create a loophole where any visitor could avoid tax by controlling the time spent in India. The ITAT agreed, underscoring that the law should not be interpreted broadly just to help high-net-worth individuals.
Expert Insights
Tax experts see this ruling as significant for cross-border tax planning. They observe that many founders and investors assume that simply shifting to a foreign address will change their tax residency. In reality, the law looks at multiple elements, including actual physical presence and economic ties. This judgment underscores how economic nexus can outweigh nominal residence claims under tax treaties.
Broader Implications for India’s Tax Policy
The Bansal case comes at a time when India is updating its tax laws and putting more scrutiny on global digital economy flows. The government is keen to prevent erosion of tax bases while still attracting foreign investment. Tax treaties like DTAA are meant to avoid double taxation, but are not meant to be loopholes for avoiding tax entirely.
This ruling may prompt professionals and founders to review how they manage their residency status and investments. It may also lead to closer attention on tax treaty use in India and abroad.
Final Words
The ITAT’s 2026 ruling against Binny Bansal’s non-resident tax claim has wide-ranging significance. It not only affects how his ₹5.8 crore refund will be handled but also sets an example for how India will interpret residency in complex cross-border cases. High-wealth individuals and global founders must now weigh tax residence carefully when planning share sales or relocations.
Frequently Asked Questions (FAQs)
ITAT rejected the claim on January 9, 2026, saying Binny Bansal spent enough days in India during FY 2019-20 to qualify as a tax resident under Indian law.
The ITAT ruled on January 9, 2026, that Binny Bansal is an Indian tax resident because of his physical presence and strong economic ties in India during the relevant year.
The ruling shows founders must meet strict residency rules. Living abroad alone may not avoid Indian tax if the time spent and business interests remain linked to India.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
