Tax Treaty: Amended India-Mauritius Tax Treaty won’t be implemented retroactively
India and Mauritius revised tax treaty won’t be imposed retroactively, it will take effect only after the agreement is signed by both countries.
Among the new provisions in the agreement is a principle purpose test that will be used to determine whether tax benefits under the treaty will extend to investments or not, as per the text of the treaty published by India’s foreign ministry.
Investment tax benefits are not payable if it is determined that one of the transaction’s motivations was to take advantage of the tax benefits, according to the amended tax treaty.
The finance ministry of India did not answer questions right away.
Data from the National Securities Deposit As of March 2024, the amount invested in India by Foreign Portfolio Investors (FPIs) from Mauritius was Rs. 4.19 lakh crore ($50.20 billion), or almost 6% of all FPI investments.
To avoid paying double taxes by non-resident investors, India and Mauritius signed the so-called Double Taxation Avoidance Agreement in 1982. The goal of the amended treaty is to stop tax avoidance and evasion.
