India and Mauritius will begin by September-end the formal talks for revising their existing double tax avoidance pact. The External Affairs Ministry is working on the exact dates for the talks, the CBDT Chairman, Mr Prakash Chandra, said.
“We expect this (renegotiation talks) to happen during August-September,” Mr Chandra told reporters here on the sidelines of a CBDT event that marked the conclusion of celebrations of 150 years of Income-Tax Department.
Any revision of the double tax avoidance agreement (DTAA) with Mauritius assumes significance as nearly 40 per cent of the total foreign investment into India comes through this island nation.
Generally, it is the Central Board of Direct Taxes (CBDT) that is responsible for renegotiating double tax avoidance pacts. The exceptions being Mauritius and Cyprus, with both these jurisdictions being handled by Ministry of External Affairs.
With the changed economic environment and increased foreign direct investment (FDI) flows from sources other Mauritius, India is keen to tax the capital gains arising from investments made in India through the Mauritius route.
But both sides have to agree for this and only then can there be a move forward on this front, sources said.