The Mauritius Double Taxation Avoidance Agreement (DTAA) is a significant bilateral treaty between India and Mauritius. It aims to prevent double taxation,...
The main purpose of the DTAA is to avoid double taxation on income earned in both countries, thereby promoting economic cooperation and fostering cross-border investments.
Historically, it allowed Mauritius-based entities investing in India to avoid capital gains tax in India on the sale of Indian shares, making Mauritius a preferred route for foreign direct investment.
Amendments in 2016 introduced a capital gains tax on the alienation of shares acquired on or after April 1, 2017, effectively closing the tax-free routing window for new investments.
Yes, while capital gains on shares are now taxed, the DTAA still provides clarity on taxation of other income streams like dividends, interest, and royalties, and offers benefits under its tax residency provisions.