Summaries and Analysis
- India has comprehensive Double Taxation Avoidance Agreements (DTAA ) with 84 countries.
- This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country.
- The Mauritius route is a channel use by foreign investor to invest in India, Mauritius is the main provider of Foreign direct investment to India.
- It is also the preferred jurisdiction for Indian outward investments into Africa.
- 40% of total FDI inflows in India come from Mauritius
- An investor routing his investment through Mauritius does not have to pay capital gains tax in India while the gains are fully exempt from taxation in Mauritius under its domestic laws.
- Therefore, the gain escapes tax altogether.
- This is being abused by investors, according to the IT department.