We study the incentives to engage in indirect tax aggressiveness and the implications of such actions for shareholder value. We take advantage of recent indirect tax reforms in India to design our study as a two-stage analysis of the antecedents and consequences of indirect tax aggressiveness. Our results suggest that size of the product portfolio, geographical proximity of manufacturing facilities to the headquarters, and the extent of international operations are associated with the propensity to avoid indirect taxes. Further, ownership concentration, membership in business groups, and financial health of the company also affect indirect tax aggressiveness. Firms involved in tax aggressive behavior suffer shareholder value loss when their privileged position comes under risk due to tax reforms, as suggested by the stock price reaction surrounding the tax legislation. Firms endowed with sufficient liquid resources and better-connected firms appear to be able to mitigate the negative consequences suffered by their tax aggressive peers.