Key Points
The Income Tax department on Friday clarified that the concerns raised on the bilateral Double Taxation Avoidance Agreement (DTAA) are premature at the moment..
The amended pact has included --the Principal Purpose Test (PPT), which essentially lays out the condition that the tax benefits under the treaty will not be applicable if it is established that obtaining that duty benefit was the principal purpose of any transaction or arrangement...
In this context, it is clarified that the concerns /queries are premature at the moment since the Protocol is yet to be ratified and notified u/s 90 of the Income-tax Act, 1961...
With PPT test now introduced in the India-Mauritius tax treaty, tax authorities in India are likely to look beyond TRC and will have the ability to deny the benefit of India-Mauritius tax treaty if it is reasonable to conclude..
Now, this amendment is proposed in the India-Mauritius tax treaty and that could become effective at any point in time now once the protocol is notified by both the countries..
You might be interested in
Amended India-Mauritius tax treaty will not be applied retrospectively: Report
13, Apr, 24The 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.