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Govt trying to renegotiate tax treaty with Mauritius
July, 05th 2006

The Government said on Tuesday that it was trying to renegotiate the double taxation avoidance agreement with Mauritius to check misuse, even while making it clear that there cannot be a unilateral decision on this matter given the diplomatic and political sensitivities.

"It's a sensitive matter. We are trying to negotiate. I cannot take a unilateral decision in this regard. There are political and diplomatic sensitivities. The Ministry of External Affairs is helping us," the Finance Minister, Mr P. Chidambaram, told newspersons.

On direct tax collections, the Finance Minister expressed confidence over achieving the Budget estimates for 2006-07 even though they appeared to be stiff targets.

He said that direct tax collections had grown by 26.3 per cent and 24.2 per cent in 2004-05 and 2005-06 respectively.

According to him, direct tax collections till June 26 this year were quite robust; he added that the first-quarter tax collections are always good.

On the CBDT's draft instruction on distinction between shares held as stock-in-trade and those held as investment, the Finance Minister said that the ICAI would be roped in to look at all aspects before they are finalised.

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