FinMin hopes tax treaty talks with Mauritius to resume before Sept
July, 16th 2011
The finance ministry hopes talks with Mauritius on the Double Tax Avoidance Agreement (DTAA) would restart before September.
There may be some talks before September, I should say, said Central Board of Direct Taxes (CBDT) Chairman Prakash Chandra on the sidelines of a function to commemorate 150 years of the income tax department.
He said the finance ministry had requested the external affairs ministry to take steps to restart the talks. They are coordinating with the Mauritian government. No date has been firmed up as yet, he said, adding discussions were expected on all issues.
According to the DTAA, capital gains from sale of shares by residents of Mauritius in India would be liable to tax only in that country. As Mauritius does not have capital gain tax, there is no burden on investors routing money to India through circuitous route. The CBDT chairman said the government was discussing to revive the talks at the point where these were left in 2008. We are just taking up from there, so the agenda can be wide. We are waiting for the response of the Mauritian government, said Chandra.
The external affairs ministry, in consultation with the government of Mauritius, would firm up the agenda, and this would happen in due course after Mauritius informed New Delhi about a convenient date, he said. Addressing income tax officials at the function, President Pratibha Devisingh Patil highlighted the need to tackle the menace of black money by tightening the noose on perpetrators, both domestically and globally.
The war against black money has to be addressed both domestically and through cross-border measures, she said. While fostering an environment of voluntary compliance would help, there was also a need for putting in place measures to ensure that the recalcitrant tax evaders were brought to book, she said. Better global cooperation should continue through agreements on tax information exchange and mutual cooperation to track evaders taking shelter abroad, according to her. She hoped the direct tax-to-gross domestic product ratio would rise beyond the present 6.1 per cent, with continuing innovative efforts and widening of small base of taxpayers at about 35 million.