The government on Monday constituted a working group to examine concerns arising out of amendments to India-Mauritius Double Taxation Avoidance Agreement (DTAA) and related issues.
The committee to be headed by Joint Secretary of the direct tax department is expected to give a report to the government in three months.
Among other things, concerns have been raised on impact over P-notes where the names of participants are kept anonymous. Investments made from Singapore have also caused concerns.
The India-Singapore tax treaty provides that the capital gains exemption in India will be available only till such time the India-Mauritius treaty provides for the benefit.
India and Mauritius had signed an amendment to their 33-year-old tax treaty that gave India the right to tax capital gains on investments from that country.
But the India-Singapore tax treaty provides that the capital gains exemption in India will be available only till such time that the India-Mauritius treaty provides for the benefit. Hence, the amendment to Singapore became a natural corollary to changes in India-Mauritius tax law.
“With a view to examine the consequential issues arising out of amendments to India-Mauritius Double Taxation Avoidance Convention and related issues, a Working Group headed by Joint Secretary (FT&TR-II), CBDT and comprising departmental officers and representatives of SEBI, custodians, brokerage firms and fund managers has been constituted,” an official statement said.
Mauritius and Singapore together account for 50% of the total FDI investment India receives. Additionally, Mauritius also accounts for 20% FPI (foreign portfolio investment) in India.
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