India-Mauritius pact brings in Principal Purpose Test
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓The Finance Ministry notified an amendment to the India-Mauritius tax treaty on August 10, 2026, introducing a Principal Purpose Test to curb abuse.
- ✓Richa Sawhney said, "The amended preamble along with the introduction of the Principal Purpose Test will bring the treaty in line with OECD BEPS minimum standards." Investments remain safe.
Story at a Glance
- Category
- BUSINESS
- Reported By
- Business Line
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
The Finance Ministry has notified an amendment to the India-Mauritius tax treaty, introducing a treaty-level Principal Purpose Test (PPT) to curb treaty abuse.
The amendment came into force on August 10, 2026, while investments made before April 1, 2017, remain outside the scope of the PPT.
The amendment also revises the treaty preamble to state that the agreement seeks to eliminate double taxation "without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including treaty-shopping arrangements" designed to secure treaty benefits indirectly for residents of third jurisdictions.
Treaty claims under scrutiny
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