India Signs Protocol to Amend Tax Treaty with Mauritius | KPMG | CA

India Signs Protocol to Amend Tax Treaty with Mauritius

India Signs Protocol to Amend Tax Treaty with Mauritius

Global Tax Adviser, June 07, 2016. Alex Feness, GTA, International Corporate Tax. India and Mauritius have signed a Protocol to make substantial amendments to the income tax treaty between the two countries. Mauritius has long been a favoured destination of multinational enterprises for investing in India or doing business with India. The Protocol must wait for the ratification procedures of each country to take place before it can enter into force.


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India Signs Protocol to Amend Tax Treaty with Mauritius

The Protocol includes measures concerning:

  • The source-based taxation of capital gains on shares (e.g., India can impose tax on capital gains arising from the alienation of shares in a company resident in India)
  • The 50% reduction in the tax rate will be subject to the "limitation on benefits" clause (that is, a resident of Mauritius, including a "shell company," and will not be entitled to benefits of the 50% reduction in the tax rate if it fails the "main purpose" and "bona fide business" tests), during a transition period April 1, 2017 to March 31, 2019
  • The source-based taxation of interest income of banks (e.g., interest arising in India to Mauritian resident banks will be subject to withholding tax in India, at a rate of 7.5% for debts or loans made after March 31, 2017, and amounts in respect of debts-claims before that date will be tax-exempt in India)
  • An exchange of information and a provision for assistance in tax collection

For more information, contact your KPMG adviser.


Information is current to June 07, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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