India-Mauritius Tax treaty revised to curb Black Money
On date 11-05-2016, India getting Mauritius to sign a revised India-Mauritius tax treaty after a decade-long effort since 1996, was an attempt to curb black money generation.
Under the revised treaty, from April 1, 2017, companies routing funds into India through Mauritius will have to pay short-term capital gains tax at half the rate prevailing during the 24-month transition period (01-04-2017 to 31-03-2019). And after 31-03-2019, Tax at full rate, currently at 15%, will apply.
Mauritius was the biggest route for black money in India. Earlier India had a Double Taxation Avoidance Treaty with Mauritius which was signed in 1983, Mauritius an island of just 1.3 million people which had become one of the biggest single source of foreign direct investment into India
The Protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius was
signed at Port Louis, Mauritius on 11-05-2016.