Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: cpt :: empanelment :: VAT Audit
« Direct Tax »
 CBDT issues final rules for taxing share buy back by companies
 CBDT issues final rules for taxing share-buyback
 The direct tax collections up to September, 2016 are at Rs. 3.27 lakh crore which is 8.95% more than the net collections for the corresponding period last year.
 IDS is tremendous success: CBDT chief Rani Singh Nair
 Submit monthly data of appeals disposed of: CBDT to officers
 Direct tax mop-up jumps 9 per cent in H1, indirect tax up 26 per cent
 Income tax department slams notice on five Mumbai-based exporters over offshore accounts
 Redress TDS mismatch grievance of taxpayers: CBDT
 Tax department changes rule for accommodating deductions for deferred spectrum payment
 Tax dept renotifies income computation, disclosure standards
 Sushil Chandra to be the next CBDT chief

India to review tax treaty with Mauritius in Dec
October, 24th 2011

The much-awaited talks between India and Mauritius over renegotiation of their tax treaty may begin soon, with India pushing for changes in the clause on the treatment of the capital gains tax. The agenda for the discussion has broadly been finalised -- and India has prepared a list of items proposed to be reviewed when the two countries meet in the second week of December.

Nonetheless, theres a catch: the renegotiated treaty may prove to be a damp squib if Mauritius does not agree to review the clause on the capital gains tax. Besides, India itself may not ask for completely eliminating the capital gains exemption, as that might hurt genuine investors as well as capital inflows from Mauritius that account for about 40 per cent of the total foreign direct investment into India.
A finance ministry official says Mauritius has agreed to renegotiate the treaty in December. From our side, everything is on the agenda...including better exchange of information and treatment of capital gains tax. But, ultimately they should agree to it.

The Double Taxation Avoidance Agreement (DTAA) between India and Mauritius provides for capital gains tax only in the country of the residence of the investor. A person routing investments through the tax haven to India does not pay tax, as such income is tax exempt under the domestic laws of Mauritius.

So, what purpose does a renegotiated treaty serve when the clause on capital gains tax is not changed? It would still provide for exchange of banking information and assistance in collection of taxes, says the official. Though Mauritius has already agreed to provide such information to India, bringing that under the treaty would strengthen the process further.

To tighten noose on treaty shopping and check tax evasion, India has been pushing Mauritius for long to revise the agreement. This would change the way foreign investors structure their investment in India. After years of persuasion, Mauritius had finally agreed to start the talks by the middle of this year, but it got postponed as a political upheaval in the country in August led to a Cabinet reshuffle.

As Mauritius is a friendly country with a huge Indian population, the tax exemption on capital gains was given under the DTAA to benefit investors there, but this was misused. And many companies started channelling their investments through the island to get tax benefit. The finance ministry wants to tax fly-by-night companies which do not have their management and control in Mauritius.

India has already starting raising tax demands against many such companies. Many of these cases are being disputed in various courts. India has also set up an overseas income tax unit in Mauritius.

Besides, the Direct Taxes Code, which is proposed to be implemented in April 2012, will introduce general anti-avoidance rules to override provisions of tax treaties under specific situation.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions