The new provisions in the treaty include a principle purpose test, which will be used to judge whether tax benefits under the treaty will apply to investments or not, according to the text of the treaty released by India s foreign ministry.
Rajesh Gandhi from Deloitte India explains the implications of including Mauritius in the PPT requirement, affecting investments pre-2017. Uncertainty looms over treaty benefits and potential challenges for entities choosing Mauritius for non-tax reasons.
The clarification follows concerns by tax experts over the agreement opening past investments to scrutiny from tax authorities at the time of exit following the protocol, which was inked on March 7. A key concern expressed by experts is about reopening of past cases in view of the amended provision.