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Older Investments Safe Under India-Mauritius Tax Treaty
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CNBC TV18•14-10-2026, 15:12
Older Investments Safe Under India-Mauritius Tax Treaty
- •The Centre's latest notification on the Principal Purpose Test under the India-Mauritius tax treaty does not change the tax treatment of investments made before April 1, 2017.
- •Kunal Shah, tax partner at PwC India, confirmed that older investments remain fully protected under established grandfathering rules agreed upon during the treaty revision.
- •The Principal Purpose Test is an anti-tax avoidance rule that will apply to investors seeking treaty benefits on other income moving forward.
- •The government previously clarified this position in a Central Board of Direct Taxes circular, ensuring grandfathered investments under treaties with Mauritius, Singapore, and Cyprus remain secure.
Key Questions Answered
According to tax experts, investments made prior to April 1, 2017, remain fully protected and grandfathered under the India-Mauritius tax treaty despite the introduction of the Principal Purpose Test amendment, continuing the government's earlier CBDT circular clarifications.
The protocol amending the India-Mauritius tax treaty to introduce the Principal Purpose Test took effect on August 10, 2026, following formal notifications by the Finance Ministry.
While older grandfathered investments remain shielded from the Principal Purpose Test, investors claiming treaty benefits on other ongoing income streams like dividends and interest may still need to undergo PPT testing going forward.
