India-Mauritius Treaty: The Protocol-Through The Looking Glass

Key takeaways:

• Shift to source based taxation restricted to capital gains accruing to Mauritius residents from sale of shares in Indian companies.
• India shall have the right to tax capital gains arising from alienation of shares by a Mauritius investor acquired on or after April 01, 2017 in a company resident in India with effect of financial year 2017-18. However, share investments before April 01, 2017 shall be grandfathered and shall not be subject to the amended regime.
• Capital gains arising out of convertible debentures should be entitled to benefits of taxation in Mauritius for Mauritius based residents. However, the aforementioned benefit shall not be available for compulsorily convertible preference shares.