India amends its tax treaty with Mauritius to curb perceived misuse for treaty benefits. Multiple outlets report that the revision introduces a Principal Purpose Test (PPT), allowing Indian tax authorities to deny treaty relief where obtaining tax advantages is a main purpose of an investment structure.
The outlets broadly agree that the amendment shifts the focus toward the purpose and commercial substance of transactions when evaluating claims for treaty benefits. NDTV adds that investors with genuine commercial reasons for routing investments through Mauritius can still claim benefits, subject to the amended treaty provisions and related clarifications. Business Line and Mint note that the amendment also includes a safeguard approach through the PPT at treaty level.
Economic Times frames the change as tightening rules around the Mauritius route for tax planning. Business Line further indicates that investments made before 1 April 2017 fall outside the test’s scope, limiting the amendment’s reach to subsequent arrangements.
