India-Mauritius Tax Treaty

The amended India-Mauritius tax treaty introduces a principal purpose test, allowing authorities to deny benefits where securing a tax advantage is a main purpose of a transaction

The amended India-Mauritius tax treaty introduces a principal purpose test, allowing authorities to deny benefits where securing a tax advantage is a main purpose of a transaction

Market participants broadly view judgment as fact-specific, centered on interpretation of grandfathering provisions under the India-Mauritius tax treaty and application of General Anti-Avoidance Rule

The India-Mauritius DTAA has been under scrutiny since it was signed in 1982. It was always seen as a route to avoid tax

High private investment requires sound tax policy and the rule of law

Apart from the bond yields and geopolitical crisis, another trigger for FPI selling was the tweak in India's tax treaty with Mauritius, which would now impose higher scrutiny on investments

Assessee appealed it was denied benefit of treaty on capital gains from share transfer

The India-Mauritius treaty was designed to attract foreign investments in the early 1990s when India's foreign exchange reserves were alarmingly low

India-Mauritius DTAA was amended to introduce a levy to prevent investors using the island nation as a shelter to avoid levies

Amended treaty removes a longstanding advantage that allowed investors to avoid paying capital gain taxes in India

Derivatives and other forms of securities will continue to be governed by existing provision of being taxed in Mauritius: Shaktikanta Das