Companies Face Hefty Tax Bills Under India High Court Ruling

An Indian Supreme Court ruling that disallows companies from using a treaty clause to lower their tax bills will force them to pay millions of dollars in back taxes—and send them hunting for relief.

Practitioners hoped the court would review its October ruling barring companies from using the most favored nation (MFN) clause in tax treaties without a notification from the Indian government.

The court’s Aug. 6 order declining to review the ruling will prompt companies to ask governments to tweak their treaties with India, renegotiate contracts to pass down costs, and prepare for possible litigation on past use of ...