There is definite “political will” in India and Mauritius to conclude a revised tax treaty so as to prevent misuse of bilateral provisions governing investments while routing of funds into and from India through the island nation, a Mauritian minister has said.

The two countries are discussing ways to prevent possible misuse of the provisions in the three-decade old treaty, especially since a major chunk of FDI and FII investments into India come from Mauritius, often seen as a place that is used for routing funds to avoid taxes.“There is some issue on the DTAA (Double Taxation Avoidance Agreement) between India and Mauritius.

“It is being addressed by the two governments,” Mauritius Minister of Industry, Commerce and Consumer Protection, Cader Sayed Hossen told PTI during his India visit here.

“There is definitely a political will on both sides (to address DTAA issues),” Hossen said, adding that the issues would be resolved to the satisfaction of both the countries. “It will (discussions) take the time that it will take. Everything would depend on the discussions of the Joint Working Group,” he added.

A Joint Working Group comprising members from the two sides was constituted in 2006 to put in place adequate safeguards to prevent misuse of the bilateral tax treaty.

Among others, India is believed to be seeking changes in the treaty so that information regarding source-based taxation of capital gains could be shared between the tax authorities.

Besides, the country is looking to incorporate benefit limitation clauses in the pact to prevent abuse of the treaty.

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