Amendment In India-Mauritius Tax Treaty

The Central Board of Direct Taxes (CBDT) vide press release dated 10.05.2016 issued the protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius.

Under the current tax treaty between India and Mauritius, capital gains arising from the sale of investments in shares of companies resident in India by a Mauritius resident were subject to tax only in Mauritius. Now, Mauritius does not levy capital gains tax under its new domestic tax laws. Thus, the transaction resulted in a nil tax liability and double non-taxation. However, now with the amendment in the treaty, the capital gains exemption has been withdrawn, in a phased manner. Accordingly, the protocol was shared by the CBDT amending the Article 12 of the Treaty.