Finally, after about 33 years of the India-Mauritius tax treaty coming into force, the treaty has now been amended. What is the key feature of the amendment?. Recent news of India and Mauritius signing a Protocol to amend their 33 year old tax treaty caused seismic changes in the tax world. Though not completely. India and Mauritius have concluded negotiations with respect to the double tax avoidance agreement (India-Mauritius DTAA) between the two countries.

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India, Mauritius set to hold fresh talks on DTAA amendments

The fact that the capital asset is located in India is immaterial. The term “fees for technical services” as used in the Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Dtaaa as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

For the purposes of this article, the term “alienation” means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting States.

They may also consult together for the elimination of double taxation in cases not provided for in the Convention. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, oil-wells, quarries and other places of extraction of natural resources, ships, boats and aircraft shall not be regarded as immovable property.

The protocol gives India the right to tax capital gains on transfer of Indian shares acquired on or after 1 April Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount.

India-Mauritius tax treaty: An end and a new beginning | Forbes India Blog

File Your Copyright – Right Now! In terms of paragraph 4, capital gains derived by a resident of Mauritius by alienation of shares of companies shall be taxable only in Mauritius according to Mauritius tax law. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of the enterprise is wholly or partly carried on. The competent authorities of the Contracting States shall notify to each other any significant changes which are made in their respective taxation laws.

Singapore and Mauritius, which have long been among the top destinations for routing investments into India, are struggling to stay relevant in the aftermath of the tax treaty amendments in that nullified a unique arbitrage opportunity for investors.


For the purposes of paragraph 1interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. Any agreement reached shall be implemented notwithstanding any time limits in the laws of the Contracting States.

How to proceed with filing DIR-3? For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

The existing taxes to which this Convention shall apply are:.

India-Mauritius DTAA amendments – a Bird’s eye view | Taxsutra

Thank you for your comment, we value dtaaa opinion and the time you took to write to us! An email sent on Friday evening to the ministry of finance and economic development of Mauritius, which signed the multilateral agreement, remained unanswered.

Notwithstanding the provisions of paragraph 1 of this article, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only maurifius the first mentioned State, if—.

Article 4 Article 13 Capital Gains of the Convention shall be amended with effect from 1.

Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be – a in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that Mauritjus, prevent its collection, or b in the case of a mauritiua under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection, the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

Recent news of India and Mauritius signing a Protocol to amend their 33 year old tax treaty caused seismic changes in the tax world. In this article, the term “taxation” means taxes which are the subject of this Convention. A resident of a Dtwa State shall not be entitled to the benefits of Article 13 3B of this Convention if its affairs were arranged with the primary purpose to take advantage of the benefits in Article 13 3B of this Convention.

When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Taxability inia Interest earned by banks Other changes agreed to between the countries pertain to taxation of interest income from India earned by banks based in Mauritius. Therefore, any resident of Mauritius deriving income from alienation of shares of Indian companies will be liable to capital gains tax only in Mauritius as per Mauritius tax law and will not have any capital gains tax liability in India.


The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than five consecutive years from the date of his first arrival in that other Contracting State.

Interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:. A side effect of this change might be a surge in investments from Mauritius based entities to mauritiuw benefit of the grandfathering clause. Subscribe to Updates via Email Enter your email address to subscribe to our updates and receive notifications of new posts by email.

India-Mauritius DTAA Revised

Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be —.

Paragraphs 3A and 3B inserted by Notification No. The present Government came to power promising action on black money stashed abroad.

Bringing the bazaars home. Copyright Registration ph no: The dyaa of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Maritius.

Soon enough, the Indian tax officers did not appreciate the prospect of perceived letter box companies in Mauritius claiming the tax exemptions and sent tax bills to them, alleging misuse of treaty.

The terms “resident of India” and “resident of Mauritius” shall be construed accordingly. The DTAA, meant to prevent double taxation of the same income in both the countries, had actually resulted in income escaping tax in both the countries, a practice referred to as double non-taxation.

The term “operation of ships or aircraft” shall mean business of transportation of persons, mail, livestock or goods, carried on by the owners or lessees or charterers of the ships or aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of ships or aircraft and any other activity directly connected with such transportation. However, the debate is not yet settled down despite the Apex Court ruling and the tax authorities have been examining investments from Mauritius and have sought to deny the Treaty benefits under the pretext of Treaty Shopping.

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