India, Mauritius sign protocol to amend tax treaty

India, Mauritius sign protocol to amend tax treaty

Daily Current Affairs / India, Mauritius sign protocol to amend tax treaty

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Category : International Published on: April 17 2024

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India has signed a protocol amending the Double Taxation Avoidance Agreement (DTAA) with Mauritius to prevent misuse of the treaty for tax evasion or avoidance.
The amended agreement includes what is called the principal purpose test (PPT), which essentially stipulates that tax benefits under the treaty will not apply if it is established that obtaining a duty benefit is a reason for any transaction. Was the main objective or system.
The new protocol on DTAA was signed on March 7 this year. The latest amendment includes a Principal Purpose Test (PPT) to decide whether a foreign investor is genuinely eligible for treaty benefits, or whether the primary reason for routing the investment through Mauritius was tax benefits.

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