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“Some issues have been raised on the India Mauritius DTAA amended just lately. On this context, it’s clarified that the issues /queries are untimely in the meanwhile for the reason that Protocol is but to be ratified and notified u/s 90 of the Earnings-tax Act, 1961,” the Central Board of Direct Taxes (CBDT) posted on ‘X’. “As and when the Protocol comes into pressure, queries, if any, might be addressed, wherever obligatory,” it added.
The clarification follows issues by tax consultants over the settlement opening previous investments to scrutiny from tax authorities on the time of exit following the protocol, which was inked on March 7. A key concern expressed by consultants is about reopening of previous instances in view of the amended provision.
Benchmark fairness indices Sensex and Nifty plunged about 1% on Friday. The 30-share BSE Sensex fell 793.25 factors to shut at 74,244.90 whereas NSE Nifty declined 234.40 factors to shut at 22,519.40.
“The important thing concern amongst international traders is the retrospective applicability of the protocol as supplied in Article 3(2). The finance ministry might must make clear the instances or conditions the place the PPT check (Principal Goal Take a look at) wouldn’t apply, e.g. the closed assessments shouldn’t be reopened,” mentioned Punit Shah, associate, Dhruva Advisors.
Article 3(2) states, “The provisions of this Protocol shall have impact from the date of entry into pressure of the Protocol, with out regard to the date on which the taxes are levied or the taxable years to which the taxes relate”.The most recent modification makes it clear that reduction underneath the treaty can’t be for the oblique advantage of residents of one other nation. In nearly all instances, shareholders or traders in Mauritian entities making investments in India are from different international locations.These investments might be examined on ‘Principal Goal’ as per the modification.
