The Central Government has notified amendments to the India-Mauritius Double Taxation Avoidance Agreement (DTAA), introducing a principal purpose test (PPT) to prevent the misuse of treaty provisions for tax avoidance and evasion. Under the revised agreement, tax treaty benefits may be denied if obtaining such benefits is found to be one of the principal purposes of a transaction or arrangement.
The amendment seeks to prevent the misuse of treaty provisions to secure unintended tax advantages while maintaining the agreement’s objective of eliminating double taxation.
India and Mauritius signed the protocol amending their existing DTAA in March 2024, in Port Louis, to strengthen safeguards against tax avoidance while facilitating bilateral trade and investment. The protocol came into force on 10th of the last month, following the completion of the necessary legal formalities by both countries.
