Confusion over the Mauritius tax treaty continues with the Indian and Mauritius government contemplating a revision of the existing treaty. FIIs invest in India by taking advantage of this treaty which helps them avoid paying tax on income generated through trading shares. If this treaty terminates, FIIs could offload even more, feel market experts.
Finance Minister Pranab Mukherjee said today that India has resumed talks with Mauritius on a double taxation avoidance agreement (DTAA). "So far as the Mauritius double taxation avoidance agreement negotiations are concerned, it is an old one. For some time the talks were suspended; now it has resumed," said Mukherjee.
Malcolm Moller, Managing Partner, Mauritius and Seychelles, Appleby does not think the DTAA amendments have begun. But he does advice caution.
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