India Tightens Mauritius Tax Treaty Rules to Curb Misuse
What Happened
The Finance Ministry announced amendments to the India–Mauritius Double Taxation Avoidance Agreement (DTAA), effective August 10, 2026. The revised rules introduce stricter Limitation of Benefits (LOB) clauses, requiring proof of substantial business activity in Mauritius to qualify for tax benefits. The move aims to prevent treaty shopping and shell company misuse. India’s changes align with OECD’s Base Erosion and Profit Shifting (BEPS) framework, ensuring only genuine investors benefit from reduced capital gains and dividend taxation.
Key Takeaways
India’s tightening of the Mauritius tax treaty reflects its effort to safeguard revenue and block abusive tax structures. By enforcing stricter eligibility, the government seeks to ensure benefits go only to legitimate investors.