he India-Mauritius Double Taxation Avoidance Convention, DTAC, is to be reviewed to incorporate appropriate changes to prevent the abuse of the treaty. The mechanism for exchange of information on tax matters between India and Mauritius is to be further strengthened. Finance Minister P. Chidambaram gave this information in the Lok Sabha today. Elaborating the proposed measure, he said capital gains is fully exempt from taxation in Mauritius under their existing law. Thus an investor routing his investments through Mauritius into India does not pay capital gains tax either in India or in Mauritius. As a result, Mauritius has become an attractive route for investment by third country residents into India through treaty abuse. Mr. Chidambaram recalled that the existing Double Taxation Avoidance Convention between India and Mauritius was notified in 1983. It provides for taxation of capital gains arising from alienation of shares only in the country of residence of the investor.

In another important step to bring back black money stashed abroad, New Delhi will be holding the next meeting of the Joint Working Group on India-Mauritius Double Taxation Avoidance Convention next month. E

Mr Krishna said that both the sides have agreed that the eleventh meeting of the India-Mauritius Joint Commission on economic, scientific, technical and cultural cooperation will be held soon in New Delhi. The Minister said, both the sides have agreed to fast-track the utilization of the economic package of 250 million US Dollars Line of Credit and 20 million US Dollars grant announced by India during the visit of Prime Minister of Mauritius, Dr Navinchandra Ramgoolam.


Highligting that piracy is ever-expanding threat in the ocean region, Mr Krishna said, both sides have decided to continue their efforts to fight the menace. India will also continue to assist in surveillance of its exclusive economic zone as well as in hydrographic surveys.