Clarification regarding taxation of income from dividends and capital gains under the Indo-Mauritius Double Tax Avoidance Convention (DTAC)

India-Mauritius Tax Clarity: Dividends and Capital Gains Taxation Explained Under Double Tax Avoidance Convention.

The circular clarifies the taxation of income from dividends and capital gains under the Indo-Mauritius Double Tax Avoidance Convention (DTAC). It states that entities incorporated in Mauritius, such as foreign institutional investors, are considered residents of Mauritius for tax purposes under the DTAC. Dividends distributed by domestic companies prior to June 1, 1997, were taxable in the hands of shareholders, with tax deductible at source. A certificate of residence from Mauritian authorities is sufficient to confirm residency and beneficial ownership for DTAC application. Income from capital gains for Mauritius residents is not taxable in India. This clarification applies to all pending proceedings.