India Notifies Amended Mauritius Tax Treaty, Introducing the Principal Purpose Test
India has notified the amended Double Taxation Avoidance Agreement with Mauritius, inserting a Principal Purpose Test (PPT) to curb treaty shopping. Notification S.O. 5611(E) of 13 October 2026, issued under Section 159(1) of the Income-tax Act, 2025, gives effect to the protocol, while the amended treaty entered into force on 10 August 2026. Under the new Article 27B, tax authorities may deny a treaty benefit if obtaining it was one of the principal purposes of an arrangement, unless the taxpayer shows the benefit accords with the treaty's object and purpose. Investments made before 1 April 2017 stay grandfathered under the 2016 protocol.
A Double Taxation Avoidance Agreement prevents the same income being taxed twice in two countries; India has DTAAs with more than 90 countries | The Principal Purpose Test is a minimum standard under Action 6 of the OECD/G20 BEPS project and is applied through the Multilateral Instrument (MLI) | Mauritius: capital Port Louis, currency Mauritian rupee; it has long ranked among the largest sources of FDI into India