India likely to soften stand on Mauritius-based funds
06 Mar 2013
Foreign investors in India using the Mauritius route may be able to breathe a little easier, as the government is likely to drop a contentious phrase about tax residency certificates (TRC) announced in the annual Budget.
The government is likely to say that the TRC is a "necessary and sufficient condition'' for foreign investors based in Mauritius to avail tax benefits in India, according to an NDTV Profit report citing unnamed sources.
The need for clarification arose after the union government's 2013-14 Budget said that a tax residency certificate "shall be necessary but not a sufficient condition" to take advantage of double taxation avoidance agreements (DTAAs).
The finance minister tried to clarify the doubts of foreign investors through a series of conference calls, but there has been confusion that tax authorities would look at not only the TRCs, but also enforce rules under existing DTAAs mandating these foreign investors are the beneficiaries of any investments, says the report.
Nearly 40 per cent of foreign institutional investments (FIIs) in India are thought to be routed through Mauritius.
