COURTKUTCHEHRY SPECIAL ON FLIPKART CO-FOUNDER BINNY BANSAL’s TAX ISSUE
ITAT Rejects Binny Bansal’s Non-Resident Status Claim
Tribunal rules Flipkart co-founder remained Indian tax resident despite Singapore relocation
Landmark order denies DTAA benefits, signals stricter stance on tax residency
By Our Legal Reporter
New Delhi: January 12, 2026:
In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) Bengaluru Bench has dismissed Binny Bansal’s claim of non-resident status for the assessment year 2020–21. The tribunal held that Bansal, co-founder of Flipkart, continued to be a resident of India under Section 6(1)(c) of the Income Tax Act, despite his relocation to Singapore.
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This ruling denies him the benefit of the India–Singapore Double Taxation Avoidance Agreement (DTAA), which he sought to claim on capital gains arising from the sale of Flipkart shares. The tribunal’s order is seen as a strong message against aggressive tax planning by startup founders and high-net-worth individuals with deep economic ties to India.
Background of the Case
- Binny Bansal, who co-founded Flipkart in 2007, fully exited the company in January 2024 after resigning from its board.
- For the assessment year 2020–21, he claimed non-resident status, arguing that he had relocated to Singapore for employment.
- He sought tax relief under the India–Singapore DTAA, which allows avoidance of double taxation for genuine non-residents.
- The tax department countered, stating that Bansal had spent 141 days in India during FY 2019–20 and over 1,200 days in India in the preceding four years, comfortably crossing the statutory threshold for residency.
Tribunal’s Observations
The ITAT bench, comprising Vice President Prashant Maharishi and Judicial Member Keshav Dubey, made several critical findings:
- Residency Test: Under Section 6(1)(c), an individual is considered resident if they spend 60 days or more in India in a financial year and 365 days or more in the preceding four years. Bansal satisfied both conditions.
- Employment Clause Rejected: Bansal argued that the 60-day threshold should be extended to 182 days under Explanation 1(b), claiming he left India for employment. The tribunal rejected this, noting he had left India in FY 2018–19, not FY 2019–20.
- Economic Nexus with India:
- Major investments and high-value properties remained in India.
- He owned no immovable property in Singapore.
- His startup-related interests and loans were India-centric.
- DTAA Tiebreaker: Applying DTAA tests (permanent home, centre of vital interests, habitual abode, nationality), the tribunal concluded Bansal’s economic interests were closer to India. His Indian nationality clinched the issue in India’s favour.
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Wider Legal Context
This ruling is significant because it clarifies how residency rules apply to individuals relocating abroad:
- Legislative Intent: Amendments to Explanation 1(b) were meant to curb arrangements where individuals manage days of stay to perpetually remain non-resident while continuing substantial economic activity in India.
- Fact-Intensive Determination: Residency cannot be decided merely on end-of-year migration; it must be assessed across the entire financial year.
- Signal to HNIs: Relocation abroad, gradual family migration, or overseas employment may not suffice to escape Indian tax residency if economic roots remain in India.
Implications of the Judgment
For Binny Bansal
- Denied DTAA benefits, meaning capital gains from Flipkart share sales remain taxable in India.
- Directed to resolve pending refund claims of ₹5.8 crore.
- May contest the order before the High Court.
For Startup Founders and HNIs
- Aggressive tax planning under DTAA will face stricter scrutiny.
- Relocation abroad must be backed by genuine economic disengagement from India.
- Investments, properties, and habitual abode will be closely examined.
For Common Taxpayers
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- Reinforces that residency rules apply uniformly.
- Clarifies that days of stay and economic interests are decisive factors.
- Encourages compliance and discourages attempts to exploit loopholes.
Expert Opinions
- Tax consultants hailed the ruling as a landmark, noting it strengthens India’s stance against tax avoidance.
- Amit Maheshwari, Partner at AKM Global, said the tribunal’s analysis of DTAA tie-breaker tests highlights the importance of evaluating centre of vital interests throughout the year, not just at year-end.
- Experts caution that each case will depend on its unique factual pattern, but the ruling sets a strong precedent.
Conclusion
The ITAT Bengaluru’s rejection of Binny Bansal’s non-resident claim is a milestone in India’s tax jurisprudence. By emphasizing residency tests and economic nexus, the tribunal has reinforced that relocation abroad alone does not guarantee non-resident status.
This ruling will have far-reaching implications for startup founders, entrepreneurs, and high-net-worth individuals seeking to shift residence overseas. It underscores India’s commitment to curbing aggressive tax planning and ensuring that those with substantial economic ties to the country remain within its tax net.
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