India to make efforts to check Mauritius DTAA misuse: Official

Concerned over the misuse of double taxation treaty with Mauritius by certain entities, the government is working on measures to check such practices, a Finance Ministry official said today.
The government is in the process of revising the Double Taxation Avoidance Agreement (DTAA) with Mauritius. Tax treaty amendments, hanging in balance for many years, are aimed at addressing India's concerns over the island nation being allegedly used to route illicit funds into the country.
"We are aware that some entities take advantage of the treaty in an unintended manner. Our effort has been to ensure that DTAA benefit are correctly given and that the treaty is not abused by any entity.

"Countries which have traditionally been low tax jurisdictions can no longer continue with the policies that benefited them in the past," Joint Secretary (International Taxation) Akhilesh Ranjan said.
India has concerns that Mauritius, which is one of the top sources of FDI into the country, is being used for round- tripping of funds. Round-tripping is usually referred to routing of domestic investments through Mauritius to take advantage of the DTAA between the two countries.
"If Mauritius starts levying capital gains tax, we will have no problem (with the treaty). The problem is capital gains tax not being levied in either of the countries," Ranjan said.