India & Mauritius reach tentative understanding on revised tax treaty

Per recent media reports, India and Mauritius have reached a tentative understanding on a revised tax treaty. While there is no formal announcement as yet from the two Governments on this development, it has been reported that the revised tax treaty is expected to contain a “Limitation of Benefit” (LOB) provision which could potentially deny benefits of the tax treaty to cases involving treaty abuse. It has also been reported that the revised tax treaty could provide for a more beneficial rate for taxing interest income earned by a Mauritius tax resident from investment in Indian debt instruments. It is likely that the Indian authorities may seek to have a stronger provision for “exchange of information” in the revised tax treaty.