India: Protocol amending tax treaty with Mauritius

India: Protocol amending tax treaty with Mauritius

Representatives of the governments of India and Mauritius today signed a Protocol to amend the income tax treaty between the two countries. The Protocol is pending the ratification procedures of each country before it can enter into force.

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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 benefit of a 50% reduction in the tax rate for a transition period 1 April 2017 to 31 March 2019 will be subject to the “limitation on benefits” (that is, a resident of Mauritius, including a “shell company,” will not be entitled to benefits of 50% reduction I the tax rate if it fails the “main purpose” and “bona fide business” tests).
  • 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 31 March 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 are included.

 

Read a May 2016 report [PDF 296 KB] prepared by the KPMG member firm in India: India and Mauritius sign a protocol amending the India-Mauritius tax treaty

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