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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Any pension, other than a pension referred to in article 18, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State shall be taxed only in the first-mentioned Contracting State. This seems to favour shareholders returns, as opposed to other countries which might still exempt entities of capital gains as stipulated in their DTAA with India but are taxed at a much higher rate domestically.

Have agreed as follows:.

However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the royalties. The times when capital gains were taxed in the resident country of the investee at zero percent are long gone.

Think Live Work Play. Gains derived by a resident of a Contract State from the alienation of any property other than those mentioned in paragraphs 12 and 3 of this article shall be taxable only in that State.

In no case shall the provisions of paragraphs 1 and 2 be construed so dta to impose on a Contracting State the obligation: Limited Agreements Agreement for avoidance of double taxation of income of enterprises operating aircraft with Afghanistan Whereas the Government of India and the Government of Afghanistan have.

When that happens, the provisions of such an agreement, with respect of cases to which where they apply, would operate even if inconsistent with the provisions of the Income-tax Act.

India, Mauritius set to hold fresh talks on DTAA amendments – Livemint

The very object of grafting the said two sections with the said clause is to enable the Central Government to issue a notification under section 90 towards implementation of the terms of the DTAs which would automatically override the provisions of the Income- tax Act in the matter of ascertainment of chargeability to income-tax and ascertainment of total income, to the extent of inconsistency with the terms of the DTAC.

During a visit to Mauritius, Prime Minister Modi raised the question of treaty re-negotiation. This reverses the previous position on taxation of such incomes and gives India the ability to tax capital gains arising on or after April 1,that arise from the sale of shares of an Indian entity.

Though not completely unanticipated, the change is significant for foreign investors to go back to the drawing board and reassess their structures. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provision of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owned by a person who has a right to prevent its collection.


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. The realignment has certainly allowed India to retain more by way of taxes but the Mauritius route is far from being obsolete.

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.

Notwithstanding the preceding provisions of indja article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic, may be taxed only in the Contracting State in which the place of effective management of the enterprise is situated.

If he has such a fixed base, the income may be taxed in the other Contracting State but only so much of it as is attributable to that fixed base. Companies registered in Mauritius are the largest source of foreign direct investment FDI into India, making it crucial for New Delhi to upgrade its bilateral tax treaty, adopting the latest international etaa that prevent multinational companies from artificially shifting profits to low tax countries.

We have now seen mauritiua inevitable realignment of ctaa terms of the Treaty. This paragraph shall not affect the taxation of the company in respect of the profits out of dtax the dividends are paid. Concluding remarks The signing of the Protocol is certainly a decisive move by the Government of India which puts at rest more than a decade long controversy around the Mauritius treaty.

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. Significantly, this development also blunts the impact of the much condemned GAAR, which would have conflicted with the capital gains exemptions under the Mauritius and Singapore treaties.

The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Prior to its substitution, said paragraph read as under:. The term “fees for dtaw services” as used in the Article means payments of any kind, other than those jndia in Articles 14 and 15 of this Convention as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.


The first paragraph gives the right of taxation of capital dttaa on the alienation of immovable property to the country in which the property is situated. Where dta reason of the provisions of paragraph 1a person other than an individual is a resident of both the Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. In what could be a reaction to the tax treaty amendment and a changing tax environment due to regulations such as Base Erosion and Profit Shifting BEPSSingapore is looking to introduce a framework to make setting up pooling vehicles simpler.

The Double Tax Avoidance Agreement between India and Mauritius

The provisions of paragraphs 12 and 3 shall not apply if the beneficial owner of the dividends, being a resident of the Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base.

The term “pension” means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services.

In terms of paragraph 4, capital gains derived by a resident of Mauritius dyaa alienation of shares of companies shall be taxable only in Mauritius according to Mauritius tax law.

The provisions of paragraph 1 shall not be construed so as to impose on a Contracting State the obligation—. In indi it plays a critical role in building a better working world for their people, their clients and their communities.

Notwithstanding the provisions of paragraph 2 of this article and articles 7, 14 and 15, where income is derived from personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State and accrues not to the entertainer or athlete himself but to dttaa person, that income shall be taxable only in the Indiw State, if that other person is supported wholly or substantially from the public funds of that other Contracting State, including any dtaa its political sub-divisions or local authorities.

Where, however, the person paying the fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the fees for technical services was incurred, and such fees for ibdia services are borne by such permanent establishment or fixed base, then such fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.