India-Mauritius DTAA Amendment: Implications and Market Reaction
| Aspect | Details |
|---|---|
| Event | India and Mauritius signed an amendment to their Double Taxation Avoidance Agreement (DTAA). |
| Date | March 7, 2024 |
| Key Amendment | Introduction of the Principal Purpose Test (PPT) to combat tax avoidance. |
| Purpose of PPT | Ensure treaty benefits are granted only for transactions with a genuine purpose. |
| Current Status | Amendment yet to be ratified and notified under Section 90 of the Income-tax Act, 1961. |
| Impact on Investments | Increased scrutiny on foreign portfolio investments via Mauritius. |
| Authority to Deny Benefits | Indian tax authorities can deny treaty benefits if obtaining benefits was a principal purpose of a transaction. |
| Market Reaction | Sensex fell by 793.25 points (1%) to 74,244.90; Nifty also declined by 1%. |
| Investor Concerns | Potential impact on investment strategies and market dynamics. |