DTAA Between India and Mauritius: Benefits, Provisions & Tax Implications in 2025

Understanding tax obligations across borders can be challenging for global investors and NRIs. The DTAA between India and Mauritius acts as a safeguard against double taxation, providing clarity on income distribution and tax liabilities. By streamlining the taxation of different types of income, this treaty supports smoother trade, transparent financial practices, and enhanced investor confidence. Businesses, professionals, and individuals benefit from reduced ambiguities, making it easier to comply with tax rules. 

DTAA Between India and Mauritius - Quick Info

This table provides a consolidated overview of the key features of the India-Mauritius DTAA, offering a quick reference for taxpayers.

Objective of the DTAA Between India and Mauritius

The primary objective of the DTAA between Mauritius and India is to establish a fair and transparent tax environment that fosters economic partnership between the two nations.

• Prevention of Double Taxation: The primary goal is to ensure that income earned in one country by a resident of the other is not subject to taxation in both jurisdictions.
• Promotion of Mutual Investment: By providing tax certainty and a clear framework, the agreement encourages businesses and individuals to invest and operate across borders.
• Prevention of Tax Evasion and Treaty Abuse: A key objective, reinforced by recent amendments, is to prevent fiscal evasion and ensure that treaty benefits are only granted for transactions with a genuine business purpose.
• Clear Allocation of Taxing Rights: The agreement clearly defines which country has the right to tax different types of income, thereby helping to avoid tax-related disputes.
• Facilitating a Stable Economic Relationship: The DTAA provides a stable and predictable foundation for the flow of capital, technology, and services between India and Mauritius.

Significance of DTAA for India and Mauritius

Due to this agreement, Mauritius was the top source of Foreign Direct Investment [FDI] into India, largely due to the favourable tax treatment of capital gains under the original treaty.

• Historical Significance: The original treaty provided a full tax exemption on capital gains, which made Mauritius a highly attractive jurisdiction for routing investments into India. 
• Shift Towards Transparency: The DTAA amendment between India and Mauritius in 2016 marked a paradigm shift. It gave India the right to tax capital gains on investments made from Mauritius, aligning the treaty with global efforts to curb tax avoidance.
• Modern Significance [Post-2024 Protocol]: The latest protocol introduces a "Principal Purpose Test" [PPT]. This means that treaty benefits can be denied if the main purpose of a transaction is merely to obtain a tax advantage. This move further strengthens the treaty's integrity and ensures only genuine investments are rewarded.
• Benefits for NRIs and Businesses: For genuine businesses and individuals, including NRIs, the DTAA continues to be highly significant. It provides lower tax rates on dividends, interest, and royalties, and offers a clear framework for tax compliance, which is crucial for income tax rules for NRIs.

Taxes Covered under DTAA Between India and Mauritius

This agreement applies to taxes on income imposed by each country. It is important to know which specific taxes are included to understand the treaty's scope. –[1]

• In India, the DTAA covers:
  • Income Tax, including any applicable surcharge.
  • Surtax [as per the Companies Surtax Act of 1964].
• In Mauritius, the DTAA covers:
  • Income Tax

The agreement also includes a clause stating that it will apply to any identical or substantially similar taxes that are imposed after the date of signing, ensuring its relevance over time.

India-Mauritius DTAA Tax Rates

A key feature of the DTAA is the provision for specific withholding tax rates on certain types of cross-border income. –[1]

Taxation on Capital Gains under DTAA Between India and Mauritius

The taxation of capital gains is the most discussed and amended part of the DTAA between India and Mauritius. The rules have undergone significant evolution over time.

• The Pre-2017 Era: Before April 1, 2017, gains from the sale of shares of an Indian company by a Mauritian resident were not taxed in India. This "grandfathering" clause protected old investments.
• The 2016 Amendment [Effective April 1, 2017]:
  • A major DTAA amendment between India and Mauritius gave India the right to tax capital gains on shares acquired on or after April 1, 2017.
  • A transition period was provided: for shares acquired between April 1, 2017, and March 31, 2019, the tax rate in India could not exceed 50% of the normal domestic rate.
  • For shares acquired on or after April 1, 2019, the full domestic tax rate applies.
• The 2024 Protocol [Principal Purpose Test - PPT]:
  • This new protocol adds another layer of scrutiny. Even if an investment was made before 2017, tax authorities can now deny treaty benefits if it is determined that the primary purpose of the arrangement was to avoid tax. This is designed to prevent "treaty shopping."
• Gains from Immovable Property: Gains from the sale of immovable property [such as land or buildings] are taxed in the country where the property is physically located. This is a vital point for NRIs who can buy property in India.
• Gains from Business Assets: Gains from the sale of movable property that is part of a "permanent establishment" [a fixed place of business] are taxed in the country where this establishment is situated.

What are the Documents required to claim DTAA TDS?

To claim the benefits of the lower TDS rates under the DTAA, certain documents must be provided to the tax authorities or the payer in the source country.

• Tax Residency Certificate [TRC] from the tax authorities of the country of residence.
• Self-attested copy of the PAN Card [for transactions in India].
• Self-attested Form 10F [for transactions in India].
• A declaration stating that the individual or company has a bona fide business purpose and is not a "shell/conduit company."
• For certain property transactions, a Lower TDS certificate for NRIs may also be required.

How to Claim DTAA Benefits?

Claiming the benefits of the DTAA between India and Mauritius involves a specific procedure during the tax filing process.

In India [for Indian residents earning in Mauritius]:

• Declare your global income, including the Mauritius income, in the Indian income tax return.
• Pay tax on this global income in India according to the applicable tax slabs.
• Claim a Foreign Tax Credit [FTC] for the taxes already paid in Mauritius by electronically filing Form 67 before the due date of filing your return.

In Mauritius [for Mauritian residents/NRIs earning in India]:

• Provide the necessary documents [TRC, PAN, Form 10F, and purpose declaration] to the entity in India that is paying the income.
• The payer in India will then deduct TDS at the lower DTAA rate, provided the transaction meets the Principal Purpose Test. This often involves filing Form 15CA and 15CB for NRIs.
• When filing their tax return in Mauritius, they can typically claim a credit for the taxes paid in India to avoid double taxation.

DTAA Impact on NRIs, Investors, and Businesses

The evolving agreement has a significant impact on all stakeholders, shifting the focus from tax savings to tax compliance and transparency.

• For NRIs: It simplifies tax obligations on income from India, such as from property investments or NRO accounts, which have specific taxation rules. However, they must now ensure their arrangements have a genuine purpose.
• For Investors: The era of zero-tax capital gains is over. The focus is now on the lower withholding tax rates for dividends and interest, and on ensuring that investment structures are not designed solely for tax avoidance.
• For Businesses: The treaty continues to provide a stable and predictable tax environment. However, companies must demonstrate a real business presence in Mauritius [substance] to avail treaty benefits, discouraging the use of shell companies.

How NoBroker Can Help with NRI Services?

Handling property and taxation while living overseas requires reliable guidance and trusted services. NoBroker assists with NRIs property management, rental support, and legal due diligence, ensuring compliance with Indian regulations. With expertise in the DTAA between India and Mauritius, our team helps in navigating TDS on property sales, claiming DTAA benefits, and managing cross-border tax filings efficiently. By offering end-to-end solutions and transparent processes, NoBroker enables NRIs to manage their Indian real estate confidently, reducing stress and ensuring that both investments and tax obligations are handled smoothly.

Know More How DTAA Works in India with Different Countries: