In a bid to prevent "abuse" of the tax avoidance treaty, India today signed with Mauritius an amendment to the pact to get rights to tax capital gains on shares of Indian company sold after April 1, 2017.<br/><br/>With the signing of the amendment to the Double Taxation Avoidance Convention (DTAC) with Mauritius, sale of shares of an Indian resident company will be taxed at 50 per cent of the applicable rate between April 1, 2017, to March 31, 2019. Full capital gains tax will apply from April 1, 2019.<br/> <br/>A finance ministry statement said, the Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and<br/>Mauritius.<br/> <br/>India had in 1983 signed a Double Taxation Avoidance Treaty with the island nation. And today an amendment to DTAC was signed in a bid to ensure that firms in Mauritius that invest in India are not just 'shell' companies who could earlier avoid paying capital gains tax in India. Revenue Secretary Hasmukh Adhia said that the treaty amendment "brings about a certainty in taxation matters for foreign investors.

In a bid to prevent "abuse" of the tax avoidance treaty, India today signed with Mauritius an amendment to the pact to get rights to tax capital gains on shares of Indian company sold after April 1, 2017.<br/><br/>With the signing of the amendment to the Double Taxation Avoidance Convention (DTAC) with Mauritius, sale of shares of an Indian resident company will be taxed at 50 per cent of the applicable rate between April 1, 2017, to March 31, 2019. Full capital gains tax will apply from April 1, 2019.<br/> <br/>A finance ministry statement said, the Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and<br/>Mauritius.<br/> <br/>India had in 1983 signed a Double Taxation Avoidance Treaty with the island nation. And today an amendment to DTAC was signed in a bid to ensure that firms in Mauritius that invest in India are not just 'shell' companies who could earlier avoid paying capital gains tax in India. Revenue Secretary Hasmukh Adhia said that the treaty amendment "brings about a certainty in taxation matters for foreign investors.