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India-Mauritius Tax Treaty

India-Mauritius Tax Treaty:

India and Mauritius amended their double taxation avoidance agreement (DTAA) to include a principal purpose test (PPT) aimed at curbing tax avoidance.

  • However, the amended protocol has not been ratified or notified by the Income Tax Department.
  • There were concerns that investments through Mauritius might face increased scrutiny by tax authorities, potentially affecting past investments as well.
  • Double taxation occurs when the same income is taxed twice in two different jurisdictions before it becomes net income.
  • To address this issue and encourage international economic activities, countries sign Double Taxation Avoidance Agreements (DTAAs).
  • These agreements establish agreed-upon tax rates and jurisdictions for specific types of income received by tax residents of one country from another country.
  • DTAA aims to prevent international double taxation and promote capital investment, trade, and economic activities between the signatory nations.
  • The agreements may cover various categories of income, depending on the types of businesses and holdings citizens have in each other’s countries.