Amendment to Avoidance of Double Taxation and Prevention of Fiscal Evasion signed with Mauritius
Q. Which of the following are the perceived benefits of Protocol for amendment of the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion recently signed with Mauritius?
1) Curb revenue loss
2) Prevent double non-taxation
3) Stop smuggling of gold and silver- Published on 25 May 16a. 1, 3
b. 1, 2
c. 2, 3
d. All of the above
ANSWER: 1, 2
- The Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius.
- It will improve transparency in tax matters and will help curb tax evasion and tax avoidance. At the same time, existing investments, i.e. investments made before 1.4.2017 have been grand-fathered and will not be subject to capital gains taxation in India.
- The amendment to the Double Taxation Avoidance Treaty with Mauritius will push offshore fund management companies to set up shop in India.
- Under the new safe harbour rules, offshore funds’ gains will be taxed as capital gains than as business income.
- The protocol is only applicable to shares currently and is unclear about hybrid instruments.
