Introduction
When a major tax notice is issued to a well-known entrepreneur like Binny Bansal, it draws immediate attention. After moving to Singapore in 2019 and selling his shares in the Flipkart holding company, he did not expect any tax liability in India. With his work, family and life seemingly settled abroad, it appeared to be a complete relocation.
However, when the case reached ITAT Bengaluru, it raised an important question for NRIs and global entrepreneurs. The ruling of 9 January 2026 makes one thing clear relocation is not judged by intention alone, but by where your real economic and personal ties continue to exist. This ITAT Bangalore international taxation ruling carries important lessons for NRIs and global entrepreneurs.
A Little Background: Who Is Binny Bansal?
Along with his co-founder, Sachin Bansal, he established the firm called Flipkart in 2007, occupying the position of Chairman & Group CEO within it. It is worth noting that in August 2018, Walmart acquired a majority stake in Flipkart, following which Binny Bansal stepped down from his role in the company.”
However, after the mentioned transaction, soon afterwards, Binny Bansal had to resign from his position of CEO in the firm due to the conflict with the management in November 2018. In addition, another significant event took place regarding Binny Bansal in February 2019—namely, he chose to live in Singapore. Of course, one may assume that it was no spontaneous act but rather a more permanent one. As a consequence, Binny Bansal had the opportunity to take up the position of CEO in the company based in Singapore, while his family members, including his wife and children, also joined him and found employment/study there.
It seems that Binny Bansal failed to consider some repercussions of the mentioned steps with regard to Indian tax laws.
The Share Sale That Started It All
During FY 2019-20, Bansal sold his shares in Flipkart Private Limited — a company incorporated in Singapore — across three transactions:
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28 August 2019: 54,596 shares sold to Tiger Global Eight Holdings
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28 August 2019: 47,759 shares sold to Internet Fund III Pte Ltd
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27 November 2019: 5,39,912 shares sold to FIT Holdings SARL
The gains were enormous. One of the buyers had already withheld roughly ₹65.7 crore as tax at source. But when Bansal filed his return for AY 2020-21, he declared himself a Non-Resident and reported total income of just ₹8.33 crore. His argument was straightforward: he was living and working in Singapore, the shares were of a Singapore company, and the India-Singapore DTAA shielded him from Indian tax on these gains.
The Income Tax Department was not convinced. A reassessment put his taxable income at approximately ₹1,081 crore.
What the Tax Department Found
The Assessing Officer did the math. Bansal spent 141 days in India during FY 2019-20. That alone does not make you a resident — the usual threshold is 182 days. But Section 6(1)(c) of the Income Tax Act has a second test: if you spent 365 or more days in India over the four preceding years, then staying even 60 days in the current year makes you a Resident. Bansal had spent 1,237 days in India over those four years and stayed 141 days in FY 2019-20. He was a Resident under plain domestic law, which meant his global income — including those Singapore share sale gains — was taxable in India. The approach adopted also reflects principles similar to transfer pricing and substance-over-form analysis in international taxation matters.
The Residential Status Battle: Two Arguments That Did Not Hold
Bansal’s legal team put forward two arguments to avoid being classified as a Resident.
The first was Explanation 1(a) to Section 6. This says that if an Indian citizen leaves India in that financial year for employment abroad, the 60-day threshold gets extended to 182 days. The problem? Bansal left India in February 2019, which falls in FY 2018-19, not FY 2019-20. The law requires the departure to occur in the relevant year. Since he had already left before that year began, this exception did not apply.
The second was Explanation 1(b), which extends the 60-day limit to 182 days for a person of Indian origin who is outside India and comes back on a visit. Bansal’s team argued he was merely visiting India during FY 2019-20. The ITAT firmly rejected this. Explanation 1(b) was designed for people who are already Non-Residents — people whose base is outside India and who come back occasionally. It was never meant to help someone who spent their whole life as an Indian Resident suddenly call themselves a visitor in their very first year of moving abroad.
ITAT Ruling: “We hold that the AO and DRP have correctly held that the period of stay cannot be extended to 182 days instead of 60 days. The relaxation under Explanation 1(b) applies only to Non-Residents and not to persons like the assessee who is a Resident.”
The DTAA Tiebreaker: Four Steps, One Answer
Even after losing the domestic residency argument, the India-Singapore DTAA offered a second line of defence. Article 4 of the DTAA has a four-step tiebreaker for situations where a person qualifies as a resident in both countries:
- Step 1 — Permanent Home: Which country does the person have a permanent home available in?
- Step 2 — Centre of Vital Interest: Where are personal and economic ties stronger?
- Step 3 — Habitual Abode: Where does the person usually stay?
- Step 4 — Nationality: If all else is tied, citizenship settles it.
Step 1, Bansal said his Singapore apartment was his home and his Bangalore house was under construction and unliveable. The ITAT disagreed. He owned a flat at Mantri Classic Apartments, Koramangala — the very address he used on income tax filings from 2008 to 2020. More damaging, he had claimed a Section 54F deduction on this property in an earlier year. Section 54F is a benefit you can only claim if the property is your residential house. You cannot tell the tax department it is your home one year to claim a deduction, then tell them it is a construction site the next year to avoid tax. The ITAT found that Bansal had a permanent home available in both India and Singapore.
Step 2, Bansal’s personal ties did lean toward Singapore — his wife, children, and job were there. But his economic ties told a very different story. His Indian investments were substantial as of March 2020. His overseas investments were built almost entirely during FY 2019–20, meaning that at the start of that year, nearly all of his financial assets were still based in India.
His employer listed a Bangalore office and worked in India’s start-up space. He owned immovable properties only in India, worth around ₹40 crore, and had lent ₹30 crore to various Indian entities.
ITAT Finding: “It is apparent that the assesses has retained his houses in India where he has lived throughout his life, where he has carried out his business. His major economic interest is more in India than Singapore.”
Step 3, Bansal spent 141 days in India — nearly five months — in his very first year of living abroad after a lifetime in the country. The ITAT found habitual abode in both countries, which moved the test to Step 4.
Step 4 was the simplest. Binny Bansal is an Indian national. That settled it. Under the DTAA tiebreaker, he was a Resident of India.
How the ITAT Ruled
The ITAT dismissed nearly every ground of Bansal’s appeal. His residential status as a Resident of India was confirmed under both domestic law and the DTAA tiebreaker. The capital gains from the Flipkart share sales were held taxable in India. All procedural arguments — about the validity of the assessment order, the jurisdiction of the faceless assessment unit, and the timing of the draft order — were dismissed as well.
The only partial win was on a refund matter. The ITAT directed the Assessing Officer to verify whether a refund of ₹5.81 crore had been paid. If not, it was to be released within 60 days. On every substantive issue, the appeal failed.
What This Case Really Tells Us
The first lesson is the most basic: moving abroad does not make you an NRI immediately. Indian tax law looks at a four-year window. If you have been in India for most of that period and come back even for two months in a given year, you are likely still a Resident. No amount of current-year planning can erase your residential history.
The second lesson is about consistency. Bansal had claimed a Section 54F deduction on his Koramangala property, telling the department it was his residential house. When that same property later became inconvenient for his DTAA argument, he tried to call it uninhabitable. Tax authorities remember what you have filed before. Such contradictions can damage your case more than the original issue.
The third lesson is about what DTAA protection actually means. A DTAA is not a blanket exemption from Indian tax. The tiebreaker under Article 4(2) asks where you genuinely belong — not just where you sleep. If your properties, your lending, your business, and your financial history are all in India, a rented flat in Singapore and a few months of foreign employment will not be enough.
The fourth lesson is about timing. Bansal’s large overseas investments were made during FY 2019-20 itself, mostly from the share sale proceeds. The ITAT was clear that the centre of vital interest is assessed across the whole year, not just at year-end. You cannot shift money abroad in October and argue your economic ties to India were weak throughout the year.
A Word for NRIs Planning Their Move
If you are planning to leave India — for a job, a business opportunity, or to join family abroad — get proper tax advice before you go. Not after the big transaction. Not when you receive a notice. Before. The rules around Section 6, the look-back period, and the DTAA tiebreaker are genuinely complicated, and the stakes are high. Think about what you own here, what you earn from India, and what your business connections look like. All of it will be examined if your tax position is ever questioned.
Conclusion
The Binny Bansal case shows a simple but important truth — shifting abroad is not just about changing your location, it’s about changing where your life actually exists. The ITAT looked beyond formal steps and focused on real connections — where his money was, where his work was linked, and where his overall life remained centered.
For anyone planning to move out of India, this case is a clear lesson. A genuine move requires more than travel plans — it needs a real shift in your financial, professional, and personal setup, along with consistency in how everything is presented.
In the end, from the perspective of Indian tax authorities, your “home” is not just where you go — it is where your life continues to stay connected. his ITAT Bengaluru judgment will remain an important reference point in international taxation and among recent ITAT Bengaluru rulings.