INDIA - MAURITIUS DTAA

1605. Agreement for avoidance of doube ta!ation and

"revention of fi#ca eva#ion $it% Mauritiu#
Whereas the annexed Convention between the Government of the
Republic of India and the Government of Mauritius for the avoidance of
double taxation and the prevention of fiscal evasion with respect to
taxes on income and capital gains and for the encouragement of
mutual trade and investment has come into force on the notification
by both the Contracting States to each other on completion of the
procedures required by their respective laws as required by !rticle "#
of the said Convention $
%ow therefore in exercise of the powers conferred by section &' of
the Income(tax !ct )&*) +,- of )&*). and section ",! of the
Companies +/rofits. Surtax !ct )&*, +0 of )&*,. the Central
Government hereby directs that all the provisions of the said
Convention shall be given effect to in the 1nion of India2
Notification & GSR %o2 &"'+3. dated *()"()&#-2
4354 67 !%%3538 C6%93%4I6% 8!438 ",(#()&#"
The Government of the Republic of India and the Government of
Mauritius, desiring to conclude a Convention for the avoidance of
double taxation and the prevention of fiscal evasion with respect to
taxes on income and capital gains and for the encouragement of
mutual trade and investment: have agreed as follows :
'(A)T*R I - S'+)* +, T(* '+N-*NTI+N
ARTIC! " # /ersonal scope # This Convention shall appl$ to persons
who are residents of one or both of the Contracting %tates&
ARTIC! ' # 4axes covered # )2 The existing taxes to which this
Convention shall appl$ are :
(a) in the case of India,
(i) the income#tax including an$ surcharge thereon imposed
under the Income#tax Act, "*+" (,- of "*+") .
(ii) the surtax imposed under the Companies (/rofits) %urtax Act,
"*+, (0 of "*+,) .
(hereinafter referred to as Indian tax) .
(b) in the case of Mauritius, the income#tax (hereinafter referred to as
Mauritius tax)&
"2 This Convention shall also appl$ to an$ identical or substantiall$
similar taxes which are imposed b$ either Contracting %tate after the
date of signature of the present Convention in addition to, or in place
of, the existing taxes referred to in paragraph ()) of this article&
-2 The competent authorities of the Contracting %tates shall notif$ to
each other an$ significant changes which are made in their respective
taxation laws&
'(A)T*R II - D*,INITI+NS
ARTIC! - # General definitions # )2 1or the purposes of this
Convention, unless the context otherwise re2uires:
(a) the term India means the territor$ of India and includes the
territorial sea and air space above it as well as an$ other maritime
3one referred to in the Territorial 4aters, Continental %helf,
!xclusive !conomic 5one and other Maritime 5ones Act, "*0+ (Act
6o& 78 of "*0+), in which India has certain rights and to the extent
that these rights can be exercised therein as if such maritime 3one
is a part of the territor$ of India .
(b) the term Mauritius means all the territories, including all the
islands, which in accordance with the laws of Mauritius, constitute
the %tate of Mauritius and includes,
(i) the territorial sea of Mauritius . and
(ii) an$ area outside the territorial sea of Mauritius which in
accordance with international law has been or ma$ hereafter
be designated, under the laws of Mauritius concerning the
Continential %helf, as an area within which the rights of
Mauritius with respect to the sea bed and sub#soil and their
natural resources ma$ be exercised .
(c) the terms a Contracting %tate and the other Contracting %tate
mean India or Mauritius as the context re2uires .
(d) the term tax means Indian tax or Mauritius tax as the context
re2uires, but shall not include an$ amount which is pa$able in
respect of an$ default or omission in relation to the taxes to which
this Convention applies or which represents a penalt$ imposed
relating to those taxes .
(e) the term person includes an individual, a compan$ and an$ other
entit$, corporate or non#corporate, which is treated as a taxable
unit under the taxation laws in force in the respective Contracting
%tates .
(f) the term compan$ means an$ bod$ corporate or an$ entit$ which
is treated as a compan$ or a bod$ corporate under the taxation
laws in force in the respective Contracting %tates .
(g) the terms enterprise of a Contracting %tate and enterprise of the
other Contracting %tate mean respectivel$ an industrial, mining,
commercial, plantation or agricultural enterprise or similar
underta9ing carried on b$ a resident of a Contracting %tate and an
industrial, mining, commercial, plantation or agricultural enterprise
or similar underta9ing carried on b$ a resident of the other
Contracting %tate .
(h) the term competent authorit$ means in the case of India, the
Central Government in the Ministr$ of 1inance (:epartment of
Revenue) or their authorised representative. and in the case of
Mauritius, the Commissioner of Income#tax or his authorised
representative .
(i) the term national means an$ individual possessing the nationalit$
of a Contracting %tate and an$ local person, partnership or
association deriving its status from the laws in force in the
Contracting %tate .
(:) the term international traffic means an$ transport b$ a ship or
aircraft operated b$ an enterprise which has its place of effective
management in a Contracting %tate, except when the ship or
aircraft is operated b$ the enterprise solel$ between places in the
other Contracting %tate&
"2 In the application of the provisions of this Convention b$ a
Contracting %tate, an$ term not defined therein shall, unless the
context otherwise re2uires, have the meaning which it has under the
laws in force of that Contracting %tate relating to the areas which are
the sub;ect of this Convention&
ARTIC! , # Residents # )2 1or the purposes of this Convention, the
term resident of a Contracting %tate means an$ person who, under the
laws of that %tate, is liable to taxation therein b$ reason of his
domicile, residence, place of management or an$ other criterion of
similar nature& The terms resident of India and resident of Mauritius
shall be construed accordingl$&
"2 4here b$ reason of the provisions of paragraph ()), an individual is
a resident of both Contracting %tates, then his residential status for the
purposes of the Convention shall be determined in accordance with the
following rules :
(a) he shall be deemed to be a resident of the Contracting %tate in
which he has a permanent home available to him. if he has a
permanent home available to him in both Contracting %tates, he
shall be deemed to be a resident of the Contracting %tate with
which his personal and economic relations are closer (hereinafter
referred to as his centre of vital interests) .
(b) if the Contracting %tate in which he has his centre of vital interests
cannot be determined, or if he does not have a permanent home
available to him in either Contracting %tate, he shall be deemed to
be a resident of the Contracting %tate in which he has an habitual
abode .
(c) if he has an habitual abode in both Contracting %tates or in neither
of them, he shall be deemed to be a resident of the
Contracting %tate of which he is a national .
(d) if he is a national of both Contracting %tates or of neither of them,
the competent authorities of the Contracting %tates shall settle the
2uestion b$ mutual agreement&
-2 4here b$ reason of the provisions of paragraph ()), a person other
than an individual is a resident of both the Contracting %tates, then it
shall be deemed to be a resident of the Contracting %tate in which its
place of effective management is situated&
ARTIC! < # /ermanent establishment # )2 1or the purposes of this
Convention, the term permanent establishment means a fixed place of
business through which the business of the enterprise is wholl$ or
partl$ carried on&
"2 The term permanent establishment shall include
(a) a place of management .
(b) a branch .
(c) an office .
(d) a factor$ .
(e) a wor9shop .
(f) a warehouse, in relation to a person providing storage facilities for
others .
(g) a mine, an oil or gas well, a 2uarr$ or an$ other place of extraction
of natural resources .
(h) a firm, plantation or other place where agricultural, forestr$,
plantation or related activities are carried on .
(i) a building site or construction or assembl$ pro;ect or supervisor$
activities in connection therewith, where such site, pro;ect or
supervisor$ activit$ continues for a period of more than nine
months&
-2 6otwithstanding the preceding provisions of this article, the term
permanent establishment shall be deemed not to include :
(a) the use of facilities solel$ for the purpose of storage or displa$ of
merchandise belonging to the enterprise .
(b) the maintenance of a stoc9 of goods or merchandise belonging to
the enterprise solel$ for the purpose of storage or displa$ .
(c) the maintenance of a stoc9 of goods or merchandise belonging to
the enterprise solel$ for the purpose of processing b$ another
enterprise .
(d) the maintenance of a fixed place of business solel$ for the purpose
of purchasing goods or merchandise or for collecting information
for the enterprise .
(e) the maintenance of a fixed place of business solel$
(i) for the purpose of advertising,
(ii) for the suppl$ of information,
(iii) for scientific research, or
(iv) for similar activities,
which have a preparator$ or auxiliar$ character for the enterprise&
,2 6otwithstanding the provisions of paragraphs ()) and (") of this
article, a person acting in a Contracting %tate for or on behalf of an
enterprise of the other Contracting %tate =other than an agent of an
independent status to whom the provisions of paragraph (;) appl$>
shall be deemed to be a permanent establishment of that enterprise in
the first#mentioned %tate if :
(i) he has and habituall$ exercises in that first#mentioned %tate, an
authorit$ to conclude contracts in the name of the enterprise,
unless his activities are limited to the purchase of goods or
merchandise for the enterprise . or
(ii) he habituall$ maintains in that first#mentioned %tate a stoc9 of
goods or merchandise belonging to the enterprise from which he
regularl$ fulfils orders on behalf of the enterprise&
;2 An enterprise of a Contracting %tate shall not be deemed to have a
permanent establishment in the other Contracting %tate merel$
because it carries on business in that other %tate through a bro9er,
general commission agent or an$ other agent of an independent
status, where such persons are acting in the ordinar$ course of their
business& ?owever, when the activities of such an agent are devoted
exclusivel$ or almost exclusivel$ on behalf of that enterprise, he will
not be considered an agent of an independent status within the
meaning of this paragraph&
*2 The fact that a compan$, which is a resident of a Contracting %tate
controls or is controlled b$ a compan$ which is a resident of the other
Contracting %tate, or which carries on business in that other
Contracting %tate (whether through a permanent establishment or
otherwise) shall not, of itself, constitute either compan$ a permanent
establishment of the other&
'(A)T*R III - TA.ATI+N +, IN'+M*
ARTIC! + # Income from immovable property # )2 Income from
immovable propert$ ma$ be taxed in the Contracting %tate in which
such propert$ is situated&
"2 The term immovable propert$ shall be defined in accordance with
the law and usage of the Contracting %tate in which the propert$ is
situated& The term shall in an$ case include propert$ accessor$ to
immovable propert$, livestoc9 and e2uipment used in agriculture and
forestr$, rights to which the provisions of general law respecting
landed propert$ appl$, usufruct of immovable propert$ and rights to
variable or fixed pa$ments as consideration for the wor9ing of, or the
right to wor9, mineral deposits, oil#wells, 2uarries and other places of
extraction of natural resources, ships, boats and aircraft shall not be
regarded as immovable propert$&
-2 The provisions of paragraph ()) shall appl$ to income derived from
the direct use, letting, or use in an$ other form of immovable propert$&
,2 The provisions of paragraphs ()) and (-) shall also appl$ to the
income from immovable propert$ of an enterprise and to income from
immovable propert$ used for the performance of independent personal
services&
ARTIC! 0 # <usiness profits # )2 The profits of an enterprise of a
Contracting %tate shall be taxable onl$ in that %tate unless the
enterprise carries on business in the other Contracting %tate through a
permanent establishment situated therein& If the enterprise carries on
business as aforesaid, the profits of the enterprise ma$ be taxed in the
other %tate but onl$ so much of them as is attributable to that
permanent establishment&
"2 %ub;ect to the provisions of paragraph (-) of this article, where an
enterprise of a Contracting %tate carries on business in the other
Contracting %tate through a permanent establishment situated therein,
there shall in each Contracting %tate be attributed to that permanent
establishment the profits which it might be expected to ma9e if it were
a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholl$
independentl$ with the enterprise of which it is a permanent
establishment& 4here the correct amount of profits attributable to a
permanent establishment cannot be readil$ determined or the
determination thereof presents exceptional difficulties, the profits
attributable to the permanent establishment ma$ be estimated on a
reasonable basis&
-2 In determining the profits of a permanent establishment, there shall
be allowed as deductions expenses which are incurred for the purposes
of the business of the permanent establishment including executive
and general administrative expenses so incurred, whether in the %tate
in which the permanent establishment is situated or elsewhere&
,2 6o profits shall be attributed to a permanent establishment b$
reason of the mere purchase b$ that permanent establishment of
goods or merchandise for the enterprise&
;2 1or the purposes of the preceding paragraphs, the profits to be
attributed to the permanent establishment shall be determined b$ the
same method $ear b$ $ear unless there is good and sufficient reason
to the contrar$&
*2 4here profits include items of income which are dealt with
separatel$ in other articles of this Convention, then the provisions of
those articles shall not be affected b$ the provisions of this article&
ARTIC! 7 # Shipping and air transport # )2 /rofits from the operation of
ships or aircraft in international traffic shall be taxable onl$ in the
Contracting %tate in which the place of effective management of the
enterprise is situated&
"2 If the place of effective management of a shipping enterprise is
aboard a ship, then it shall be deemed to be situated in the Contracting
%tate in which the home harbour of the ship is situated or, if there is no
such home harbour, in the Contracting %tate of which the operator of
the ship is resident&
-2 The provisions of paragraph ()) of this article shall also appl$ to
profits from the participation in a pool, a ;oint business or an
international operating agenc$&
,2 1or the purposes of paragraph ()), interest on funds connected with
the operation of ships or aircraft in international traffic shall be
regarded as profits from the operation of such ships or aircraft, and the
provisions of Article "" shall not appl$ in relation to such interest&
;2 The term operation of ships or aircraft shall mean business of
transportation of persons, mail, livestoc9 or goods, carried on b$ the
owners or lessees or charterers of the ships or aircraft, including the
sale of tic9ets for such transportation on behalf of other enterprises,
the incidental lease of ships or aircraft and an$ other activit$ directl$
connected with such transportation&
ARTIC! * # !ssociated enterprises # 4here
(a) an enterprise of a Contracting %tate participates, directl$ or
indirectl$, in the management, control or capital of an enterprise of
the other Contracting %tate, or
(b) the same persons participate, directl$ or indirectl$, in the
management, control or capital of an enterprise of a Contracting
%tate and an enterprise of the other Contracting %tate,
and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ from
those which would be made between independent enterprises, then
an$ profits which would, but for those conditions, have accrued to one
of the enterprises, but, b$ reason of those conditions have not so
accrued, ma$ be included in the profits of that enterprise and taxed
accordingl$&
ARTIC! "8 # 8ividends # )2 :ividends paid b$ a compan$ which is a
resident of a Contracting %tate to a resident of the other Contracting
%tate ma$ be taxed in that other %tate&
"2 ?owever, such dividends ma$ also be taxed in the Contracting %tate
of which the compan$ pa$ing the dividends is a resident and according
to the laws of that %tate, but if the recipient is the beneficial owner of
the dividends the tax so charged shall not exceed
(a) five per cent of the gross amount of the dividends if the beneficial
owner is a compan$ which holds directl$ at least "8 per cent of the
capital of the compan$ pa$ing the dividends .
(b) fifteen per cent of the gross amount of the dividends in all other
cases&
This paragraph shall not affect the taxation of the compan$ in respect
of the profits out of which the dividends are paid&
-2 6otwithstanding the provisions of paragraph ("), dividends paid b$ a
compan$ which is a resident of Mauritius to a resident of India ma$ be
taxed in Mauritius and according to the laws of Mauritius, as long as
dividends paid b$ companies which are residents of Mauritius are
allowed as deductible expenses for determining their taxable profits&
?owever, the tax charged shall not exceed the rate of the Mauritius tax
on profit of the compan$ pa$ing the dividends&
,2 The term dividends as used in this Article means income from
shares or other rights, not being debt#claims, participating in profits, as
well as income from other corporate rights which is sub;ected to the
same taxation treatment as income from shares b$ the laws of the
Contracting %tate of which the compan$ ma9ing the distribution is a
resident&
;2 The provisions of paragraphs ()), (") and (-) shall not appl$ if the
beneficial owner of the dividends, being a resident of the Contracting
%tate, carries on business in the other Contracting %tate of which the
compan$ pa$ing the dividends is a resident, through a permanent
establishment situated therein or performs in that other %tate
independent personal services from a fixed base situated therein and
the holding in respect of which the dividends are paid is effectivel$
connected with such permanent establishment or fixed base& In such a
case, the provisions of article 0 or article ",, as the case ma$ be, shall
appl$&
*2 4here a compan$ which is a resident of a Contracting %tate derives
profits or income from the other Contracting %tate, that other %tate
ma$ not impose an$ tax on the dividends paid b$ the compan$, except
insofar as such dividends are paid to a resident of that other %tate or
insofar as the holding in respect of which the dividends are paid is
effectivel$ connected with a permanent establishment or a fixed base
situated in that other %tate nor sub;ect the compan$s undistributed
profits to a tax on the compan$s undistributed profits, even if the
dividends paid or the undistributed profits consist wholl$ or partl$ of
profits or income arising in such other %tate&
ARTIC! "" # Interest # )2 Interest arising in a Contracting %tate and
paid to a resident of the other Contracting %tate ma$ be taxed in that
other %tate&
"2 ?owever, sub;ect to the provisions of paragraphs (-) and (,) of this
article, such interest ma$ also be taxed in the Contracting %tate in
which it arises and according to the laws of that %tate&
-2 Interest arising in a Contracting %tate shall be exempt from tax in
that %tate provided it is derived and beneficiall$ owned b$ :
(a) the Government or a local authorit$ of the other Contracting
%tate .
(b) an$ agenc$ or entit$ created or organised b$ the Government of
the other Contracting %tate . or
(c) an$ ban9 carr$ing on a bona fide ban9ing business which is a
resident of the other Contracting %tate&
,2 Interest arising in a Contracting %tate shall be exempt from tax in
that Contracting %tate to the extent approved b$ the Government of
that %tate if it is derived and beneficiall$ owned b$ an$ person =other
than a person referred to in paragraph (-)> who is a resident of the
other Contracting %tate provided that the transaction giving rise to the
debt#claim has been approved in this regard b$ the Government of the
first#mentioned Contracting %tate&
;2 The term interest as used in this Article means income from debt#
claims of ever$ 9ind, whether or not secured b$ mortgage, and
whether or not carr$ing a right to participate in the debtors profits,
and, in particular, income from Government securities and income
from bonds or debentures, including premiums and pri3es attaching to
such securities, bonds or debentures& /enalt$ charges for late pa$ment
shall not be regarded as interest for the purpose of this article&
*2 The provisions of paragraphs ()), ("), (-) and (,) shall not appl$ if
the recipient of the interest, being a resident of a Contracting %tate,
carries on business in the other Contracting %tate in which the interest
arises, through a permanent establishment situated therein, or
performs in that other %tate independent personal services from a
fixed base situated therein, and the debt#claim in respect of which the
interest is paid is effectivel$ connected with such permanent
establishment or fixed base& In such case, the provisions of article 0 or
article ",, as the case ma$ be, shall appl$&
02 Interest shall be deemed to arise in a Contracting %tate when the
pa$er is that Contracting %tate itself, a political sub#division, a local
authorit$ or a resident of that %tate& 4here, however, the person
pa$ing the interest, whether he is a resident of a Contracting %tate or
not, has in a Contracting %tate a permanent establishment in
connection with which the indebtedness on which the interest is paid
was incurred, and such interest is borne b$ that permanent
establishment, then such interest shall be deemed to arise in the
Contracting %tate in which the permanent establishment is situated&
#2 4here, b$ reason of a special relationship between the pa$er and
the recipient or between both of them and some other person, the
amount of the interest paid, having regard to the debt#claim for which
it is paid, exceeds the amount which would have been agreed upon b$
the pa$er and the recipient in the absence of such relationship, the
provisions of this article shall appl$ onl$ to the last#mentioned amount&
In that case, the excess part of the pa$ments shall remain taxable
according to the law of each Contracting %tate, due regard being had
to the other provisions of this Convention&
ARTIC! "' # Royalties # )2 Ro$alties arising in a Contracting %tate and
paid to a resident of the other Contracting %tate ma$ be taxed in that
other %tate&
"2 ?owever, such ro$alties ma$ also be taxed in the Contracting %tate
in which the$ arise, and according to the law of that %tate, but the tax
so charged shall not exceed "< per cent of the gross amount of the
ro$alties&
-2 The term ro$alties as used in this Article means pa$ments of an$
9ind received as a consideration for the use of, or the right to use, an$
cop$right of literar$, artistic or scientific wor9 (including
cinematograph films, and films or tapes for radio or television
broadcasting), an$ patent, trade mar9, design or model, plan, secret
formula or process or for the use of, or the right to use, industrial,
commercial or scientific e2uipment, or for information concerning
industrial, commercial or scientific experience&
,2 The provisions of paragraphs ()) and (") shall not appl$ if the
recipient of the ro$alties, being a resident of a Contracting %tate
carries on business in the other Contracting %tate in which the ro$alties
arise, through a permanent establishment situated therein, or
performs in that other %tate independent personal services from a
fixed base situated therein, and the right or propert$ in respect of
which the ro$alties are paid is effectivel$ connected with such
permanent establishment or fixed base& In such a case, the provisions
of article 0 or article ",, as the case ma$ be, shall appl$&
;2 Ro$alties shall be deemed to arise in a Contracting %tate when the
pa$er is that Contracting %tate itself, a political sub#division, a local
authorit$ or a resident of that %tate, where, however, the person
pa$ing the ro$alties whether he is a resident of a Contracting %tate, or
not, has in a Contracting %tate a permanent establishment in
connection with which the liabilit$ to pa$ the ro$alties was incurred,
and such ro$alties are borne b$ such permanent establishment, then
such ro$alties shall be deemed to arise in the Contracting %tate in
which the permanent establishment is situated&
*2 4here, b$ reason of a special relationship between the pa$er and
the recipient or between both of them and some other person, the
amount of ro$alties paid, having regard to the use, right or information
for which the$ are paid, exceeds the amount which would have been
agreed upon b$ the pa$er and the recipient in the absence of such
relationship, the provisions of this article shall appl$ onl$ to the last#
mentioned amount& In that case, the excess part of the pa$ments shall
remain taxable according to the laws of each Contracting %tate, due
regard being had to the other provisions of this Convention&
ARTIC! "- # Capital gains # )2 Gains from the alienation of immovable
propert$, as defined in paragraph (") of article +, ma$ be taxed in the
Contracting %tate in which such propert$ is situated&
"2 Gains from the alienation of movable propert$ forming part of the
business propert$ of a permanent establishment which an enterprise of
a Contracting %tate has in the other Contracting %tate or of movable
propert$ pertaining to a fixed base available to a resident of a
Contracting %tate in the other Contracting %tate for the purpose of
performing independent personal services, including such gains from
the alienation of such a permanent establishment (alone or together
with the whole enterprise) or of such a fixed base, ma$ be taxed in
that other %tate&
-2 6otwithstanding the provisions of paragraph (") of this article, gains
from the alienation of ships and aircraft operated in international traffic
and movable propert$ pertaining to the operation of such ships and
aircraft, shall be taxable onl$ in the Contracting %tate in which the
place of effective management of the enterprise is situated&
,2 Gains derived b$ a resident of a Contracting %tate from the
alienation of an$ propert$ other than those mentioned in paragraphs
()), (") and (-) of this article shall be taxable onl$ in that %tate&
;2 1or the purposes of this article, the term alienation means the sale,
exchange, transfer, or relin2uishment of the propert$ or the
extinguishment of an$ rights therein or the compulsor$ ac2uisition
thereof under an$ law in force in the respective Contracting %tates&
ARTIC! ", # Independent personal services # )2 Income derived b$ a
resident of a Contracting %tate in respect of professional services or
other independent activities of a similar character shall be taxable onl$
in that %tate unless he has a fixed base regularl$ available to him in
the other Contracting %tate for the purpose of performing his activities&
If he has such a fixed base, the income ma$ be taxed in the other
Contracting %tate but onl$ so such of it as is attributable to that fixed
base&
"2 The term professional services includes especiall$ independent
scientific, literar$, artistic, educational or teaching activities, as well as
the independent activities of ph$sicians, law$ers, engineers, architects,
dentists and accountants&
ARTIC! "< # 8ependent personal services # )2 %ub;ect to the
provisions of articles "+, "0, "7, "*, '8 and '", salaries, wages and
other similar remuneration derived b$ a resident of a Contracting %tate
in respect of an emplo$ment shall be taxable onl$ in that %tate unless
the emplo$ment is exercised in the other Contracting %tate& If the
emplo$ment is so exercised, such remuneration as is derived
therefrom ma$ be taxed in that other Contracting %tate&
"2 6otwithstanding the provisions of paragraph ()) of this article,
remuneration derived b$ a resident of a Contracting %tate in respect of
an emplo$ment exercised in the other Contracting %tate shall be
taxable onl$ in the first mentioned %tate, if
(a) the recipient is present in the other %tate for a period or periods
not exceeding in the aggregate "7- da$s in the relevant previous
$ear or $ear of income, and
(b) the remuneration is paid b$, or on behalf of, an emplo$er who is
not a resident of the other %tate, and
(c) the remuneration is not borne b$ a permanent establishment or a
fixed base which the emplo$er has in the other %tate&
-2 6otwithstanding the preceding provisions of this article,
remuneration in respect of an emplo$ment exercised aboard a ship or
aircraft in international traffic, ma$ be taxed onl$ in the Contracting
%tate in which the place of effective management of the enterprise is
situated&
ARTIC! "+ # 8irectors fees # :irectors fees and other similar pa$ments
derived b$ a resident of a Contracting %tate in his capacit$ as a
member of the board of directors of a compan$ which is a resident of
the other Contracting %tate ma$ be taxed in that other Contracting
%tate&
ARTIC! "0 # !rtistes and athletes # )2 6otwithstanding the provisions
of articles ", and "<, income derived b$ public entertainers such as
theatre, motion picture, radio or television artistes and musicians, and
b$ athletes, from their personal activities as such ma$ be taxed in the
Contracting %tate in which these activities are exercised&
"2 4here income is derived from personal activities exercised b$ an
entertainer or an athlete in his capacit$ as such, and accrues not to the
entertainer or athlete himself but to another person, that income ma$,
notwithstanding the provisions of articles 0, ", and "<, be taxed in the
%tate in which the activities of the entertainer or athlete are exercised&
-2 6otwithstanding the provisions of paragraph ()) of this article,
income derived b$ an entertainer or an athlete who is a resident of a
Contracting %tate from his personal activities as such exercised in the
other Contracting %tate, shall be taxable onl$ in the first#mentioned
Contracting %tate, if those activities in the other Contracting %tate, are
supported wholl$ or substantiall$ from the public funds of the first#
mentioned Contracting %tate, including an$ of its political sub#divisions
or local authorities&
,2 6otwithstanding the provisions of paragraph (") of this article and
articles 0, ", and "<, where income is derived from personal activities
exercised b$ an entertainer or an athlete in his capacit$ as such in a
Contracting %tate and accrues not to the entertainer or athlete himself
but to another person, that income shall be taxable onl$ in the
Contracting %tate, if that other person is supported wholl$ or
substantiall$ from the public funds of that other Contracting %tate,
including an$ of its political sub#divisions or local authorities&
ARTIC! "7 # Governmental functions # )2 Remuneration, other than
pension, paid b$ the Government of a Contracting %tate, to an
individual who is a national of that %tate in respect of services
rendered to that %tate shall be taxable onl$ in that %tate&
"2 An$ pension paid b$ the Government of a Contracting %tate to an
individual who is a national of that %tate, shall be taxable onl$ in that
Contracting %tate&
-2 The provisions of paragraphs ()) and (") of this article shall not
appl$ to remuneration and pensions in respect of services rendered in
connection with an$ business carried on b$ the Government of either
of the Contracting %tates for the purpose of profit&
,2 The provisions of paragraph ()) of this article shall li9ewise appl$ in
respect of remuneration paid under a development assistance
programme of a Contracting %tate, out of funds supplied b$ that %tate,
to a specialist or volunteer seconded to the other Contracting %tate
with the consent of that other %tate&
;2 1or the purposes of this article, the term Government shall include
an$ %tate Government or local or statutor$ authorit$ of either
Contracting %tate and, in particular, the Reserve @an9 of India and the
@an9 of Mauritius&
ARTIC! "* # %on(Government pensions and annuities # )2 An$ pension,
other than a pension referred to in article "7, or an$ annuit$ derived b$
a resident of a Contracting %tate from sources within the other
Contracting %tate shall be taxed onl$ in the first#mentioned
Contracting %tate&
"2 The term pension means a periodic pa$ment made in consideration
of past services or b$ wa$ of compensation for in;uries received in the
course of performance of services&
-2 The term annuit$ means a stated sum pa$able periodicall$ at stated
times during life or during a specified or ascertainable period of time,
under an obligation to ma9e the pa$ments in return for ade2uate and
full consideration in mone$ or mone$s worth&
ARTIC! '8 # Students and apprentices # )2 A student or business
apprentice who is or was a resident of one of the Contracting %tates
immediatel$ before visiting the other Contracting %tate and who is
present in that other Contracting %tate solel$ for the purpose of his
education or training, shall be exempt from tax in that other
Contracting %tate on
(a) pa$ments made to him from sources outside that other
Contracting %tate for the purposes of his maintenance, education
or training, and
(b) remuneration from emplo$ment in that other Contracting %tate, in
an amount not exceeding Rs& "<,888 in Indian currenc$ or its
e2uivalent in Mauritius rupees at the parit$ rate of exchange
during an$ previous $ear or $ear of income, as the case ma$ be,
provided that such emplo$ment is directl$ related to his studies or
is underta9en for the purpose of his maintenance&
"2 The benefits of this article shall extend onl$ for such period of time
as ma$ be reasonable or customaril$ re2uired to complete the
education or training underta9en, but in no event shall an$ individual
have the benefits of this article for more than five consecutive $ears
from the date of his first arrival in that other Contracting %tate&
ARTIC! '" # /rofessors teachers and research scholars # )2 A
professor, teacher and research scholar who is or was a resident of one
of the Contracting %tates immediatel$ before visiting the other
Contracting %tate at the invitation of that other Contracting %tate or of
a universit$, college, school or other approved institution in that other
Contracting %tate for the purpose of teaching or engaging in research,
or both, at the universit$, college, school or other approved institution,
shall be exempt from tax in that other Contracting %tate on an$
remuneration for such teaching or research for a period not exceeding
two $ears from the date of his arrival in that other Contracting %tate&
"2 This article shall not appl$ to income from research if the research is
underta9en primaril$ for the private benefit of a specific person or
persons&
-2 1or the purposes of this article and article '8 an individual shall be
deemed to be resident of a Contracting %tate if he is a resident in that
Contracting %tate in the previous $ear or the $ear of income, as the
case ma$ be, in which he visits the other Contracting %tate or in the
immediatel$ preceding previous $ear or the $ear of income&
,2 1or the purpose of paragraph ()), approved institution means an
institution which has been approved in this regard b$ the competent
authorit$ of the concerned Contracting %tate&
ARTIC! '' # 6ther income # )2 %ub;ect to the provisions of paragraph
(") of this article, items of income of a resident of a Contracting %tate,
wherever arising, which are not expressl$ dealt with in the foregoing
articles of this Convention, shall be taxable onl$ in that
Contracting %tate&
"2 The provisions of paragraph ()) shall not appl$ to income, other than
income from immovable propert$ as defined in paragraph (") of article
+, if the recipient of such income, being a resident of a Contracting
%tate, carries on business in the other Contracting %tate through a
permanent establishment situated therein, or performs in that other
%tate independent personal services from a fixed base situated therein
and the right or propert$ in respect of which the income is paid is
effectivel$ connected with such permanent establishment or fixed
base& In such case, the provisions of article 0 or article ",, as the case
ma$ be, shall appl$&
'(A)T*R I- - M*T(+DS ,+R */IMINATI+N +,
D+U0/* TA.ATI+N
ARTIC! '- # 3limination of double taxation # )2 The laws in force in
either of the Contracting %tates shall continue to govern the taxation of
income in the respective Contracting %tates except where provisions to
the contrar$ are made in this Convention&
"2 (a) The amount of Mauritius tax pa$able, under the laws of Mauritius
and in accordance with the provisions of this Convention, whether
directl$ or b$ deduction, b$ a resident of India, in respect of profits or
income arising in Mauritius, which has been sub;ected to tax both in
India and in Mauritius, shall be allowed as a credit against the Indian
tax pa$able in respect of such profits or income provided that such
credit shall not exceed the Indian tax (as computed before allowing
an$ such credit) which is appropriate to the profits or income arising in
Mauritius& 1urther, where such resident is a compan$ b$ which surtax
is pa$able in India, the credit aforesaid shall be allowed in the first
instance against income#tax pa$able b$ the compan$ in India and as to
the balance, if an$, against surtax pa$able b$ it in India&
(b) In the case of a dividend paid b$ a compan$ which is a resident of
Mauritius to a compan$ which is a resident of India and which owns at
least "8 per cent of the shares of the compan$ pa$ing the dividend,
the credit shall ta9e into account =in addition to an$ Mauritius tax for
which credit ma$ be allowed under the provisions of sub#paragraph (a)
of this paragraph> the Mauritius tax pa$able b$ the compan$ in respect
of the profits out of which such dividend is paid&
-2 1or the purposes of the credit referred to in paragraph (") the term
Mauritius tax pa$able shall be deemed to include an$ amount which
would have been pa$able as Mauritius tax for an$ $ear but for an
exemption or reduction of tax granted for that $ear or an$ part thereof
under :
(i) sections --, -,, -,A and -,@ of the Mauritius Income#tax Act, "*0,
(," of "*0,) .
(ii) an$ other provision which ma$ subse2uentl$ be made granting an
exemption or reduction of tax which the competent authorities of
the Contracting %tates agree to be for the purposes of economic
development&
,2 (a) The amount of Indian tax pa$able under the laws of India and in
accordance with the provisions of this Convention, whether directl$ or
b$ deduction, b$ a resident of Mauritius, in respect of profits or income
arising in India, which has been sub;ected to tax both in India and
Mauritius shall be allowed as a credit against Mauritius tax pa$able in
respect of such profits or income provided that such credit shall not
exceed the Mauritius tax (as computed before allowing an$ such
credit) is appropriate to the profits or income arising in India&
(b) In the case of a dividend paid b$ a compan$ which is a resident of
India to a compan$ which is a resident of Mauritius and which owns at
least "8 per cent of the shares of the compan$ pa$ing the dividend,
the credit shall ta9e into account =in addition to an$ Indian tax for
which credit ma$ be allowed under the provisions of sub#paragraph (a)
of this paragraph> the Indian tax pa$able b$ the compan$ in respect of
the profits out of which such dividend is paid&
;2 1or the purposes of the credit referred to in paragraph (,), the term
Indian tax pa$able shall be deemed to include an$ amount b$ which
tax has been reduced b$ the special incentive measures under
(i) section "8(,), "8(,!), "8(*)(viia), "8();)(iv), "8("#), "8A, -'A,
--A, -<@, <,!, 78??, 78??A, 78#I or 78 of the Income#tax Act,
"*+" (,- of "*+").
(ii) an$ other provision which ma$ subse2uentl$ be enacted granting a
reduction of tax which the competent authorities of the Contracting
%tates agree to be for the purposes of economic development&
*2 4here under this Convention a resident of a Contracting %tate is
exempt from tax in that Contracting %tate in respect of income derived
from the other Contracting %tate, then the first#mentioned Contracting
%tate ma$, in calculating tax on the remaining income of that person,
appl$ the rate of tax which would have been applicable if the income
exempted from tax in accordance with this Convention had not been
so exempted&
'(A)T*R - - S)*'IA/ )R+-ISI+NS
ARTIC! ', # %on(discrimination # )2 The nationals of a
Contracting %tate shall not be sub;ected in the other Contracting %tate
to an$ taxation or an$ re2uirement connected therewith which is other
or more burdensome than the taxation and connected re2uirements to
which nationals of that other %tate in the same circumstances are or
ma$ be sub;ected&
"2 The taxation on a permanent establishment which an enterprise of a
Contracting %tate has in the other Contracting %tate shall not be less
favourabl$ levied in that other %tate than the taxation levied on
enterprises of that other %tate carr$ing on the same activities in the
same circumstances&
-2 6othing contained in this Article shall be construed as obliging a
Contracting %tate to grant persons not resident in that %tate an$
personal allowances, reliefs, reductions and deductions for taxation
purposes which are b$ law available onl$ to persons who are so
resident&
,2 !nterprises of a Contracting %tate, the capital of which is wholl$ or
partl$ owned or controlled, directl$ or indirectl$, b$ one or more
residents of the other Contracting %tate, shall not be sub;ected in the
first#mentioned Contracting %tate to an$ taxation or an$ re2uirement
connected therewith which is other or more burdensome than the
taxation and connected re2uirements to which other similar
enterprises of that first#mentioned %tate are or ma$ be sub;ected in
the same circumstances&
;2 In this article, the term taxation means taxes which are the sub;ect
of this Convention&
ARTIC! '< # Mutual agreement procedure # )2 4here a resident of a
Contracting %tate considers that the actions of one or both of the
Contracting %tates result or will result for him in taxation not in
accordance with this Convention, he ma$, notwithstanding the
remedies provided b$ the national laws of those %tates, present his
case to the competent authorit$ of the Contracting %tate of which he is
a resident& This case must be presented within three $ears of the date
of receipt of notice of the action which gives rise to taxation not in
accordance with the Convention&
"2 The competent authorit$ shall endeavour, if the ob;ection appears to
it to be ;ustified and if it is not itself able to arrive at an appropriate
solution, to resolve the case b$ mutual agreement with the competent
authorit$ of the other Contracting %tate, with a view to the avoidance
of taxation not in accordance with the Convention& An$ agreement
reached shall be implemented notwithstanding an$ time limits in the
laws of the Contracting %tates&
-2 The competent authorities of the Contracting %tates shall endeavour
to resolve b$ mutual agreement an$ difficulties or doubts arising as to
the interpretation or application of the Convention& The$ ma$ also
consult together for the elimination of double taxation in cases not
provided for in the Convention&
,2 The competent authorities of the Contracting %tates ma$
communicate with each other directl$ for the purpose of reaching an
agreement in the sense of the preceding paragraphs& 4hen it seems
advisable in order to reach agreement to have an oral exchange of
opinions, such exchange ma$ ta9e place through a Commission
consisting of representatives of the competent authorities of the
Contracting %tates&
ARTIC! '+ # 3xchange of information or document # )2 The competent
authorities of the Contracting %tates shall exchange such information
or document as is necessar$ for carr$ing out the provisions of this
Convention or for prevention of evasion of taxes which are the sub;ect
of this Convention& An$ information or document so exchanged shall be
treated as secret but ma$ be disclosed to persons (including courts or
other authorities) concerned with the assessment, collection,
enforcement, investigation or prosecution in respect of the taxes which
are the sub;ect of this Convention, or to persons with respect to whom
the information or document relates&
"2 The exchange of information or documents shall be either on a
routine basis or on re2uest with reference to particular cases or both&
The competent authorities of the Contracting %tates shall agree from
time to time on the list of the information or documents which shall be
furnished on a routine basis&
-2 The provisions of paragraph ()) shall not be construed so as to
impose on a Contracting %tate the obligation
(a) to carr$ out administrative measures at variance with the laws or
administrative practice of that or of the other Contracting %tate .
(b) to suppl$ information or documents which are not obtainable under
the laws or in the normal course of the administration of that or of
the other Contracting %tate .
(c) to suppl$ information or documents which would disclose an$
trade, business, industrial, commercial or professional secret or
trade process or information the disclosure of which would be
contrar$ to public polic$&
ARTIC! '0 # 8iplomatic and consular activities # 6othing in this
Convention shall affect the fiscal privileges of diplomatic or consular
officials under the general rules of international law or under the
provisions of special agreements&
'(A)T*R -I - ,INA/ )R+-ISI+NS
ARTIC! '7 # 3ntry into force # !ach of the Contracting %tate shall
notif$ to the other completion of the procedures re2uired b$ its law for
the bringing into force of this Convention& The Convention shall enter
into force on the date of the later of these notifications and shall
thereupon have effect
(a) in India, in respect of income and capital gains assessable for an$
assessment $ear commencing on or after "st April, "*7- .
(b) in Mauritius, in respect of income and capital gains assessable for
an$ assessment $ear commencing on or after "st Aul$, "*7-&
ARTIC! '* # 4ermination # This Convention shall remain in force
indefinitel$ but either of the Contracting %tates ma$, on or before the
thirtieth da$ of Aune in an$ calendar $ear beginning after the expiration
of a period of five $ears from the date of its entr$ into force, give the
other Contracting %tate through diplomatic channels, written notice of
termination and, in such event, this Convention shall cease to have
effect
(a) in India, in respect of income and capital gains assessable for the
assessment $ear commencing on "st da$ of April in the second
calendar $ear next following the calendar $ear in which the notice
is given, and subse2uent $ears .
(b) in Mauritius, in respect of income and capital gains assessable for
the assessment $ear commencing on "st da$ of Aul$ in the second
calendar $ear next following the calendar $ear in which the notice
is given, and subse2uent $ears&
In witness whereof the undersigned, being dul$ authorised thereto,
have signed the present Convention&
:one on this ',th da$ of August, "*7' at /ort ouis on two original
copies each in ?indi and !nglish languages, both the texts being
e2uall$ authentic& In case of divergence between the two texts, the
!nglish text shall be the operative one&
BB BB
BB
1605A. Ta!ation of income from dividend and ca"ita
gain# under t%e Indo-Mauritiu# Doube Ta! Avoidance
'onvention
1. The Ministr$ of 1inance toda$ "-#,#'888 issued a clarification
regarding taxation of income from dividends and capital gains under
the Indo#Mauritius :ouble Tax Avoidance Convention (:TAC)& In a
circular addressed to all the Chief Commissioners of Income#tax, the
Ministr$ said provisions of the Indo#Mauritius :TAC of "*7- appl$ to
residents of both India and Mauritius& Article , of the :TAC defines a
resident of one %tate to mean an$ person who, under the laws of that
%tate is liable to taxation therein b$ reason of his domicile, residence,
place of management or an$ other criterion of a similar nature& 1oreign
Institutional Investors and other investment funds, etc&, which are
operating from Mauritius are invariabl$ incorporated in that countr$&
These entities are liable to tax under the Mauritius tax law and are
therefore to be considered as residents of Mauritius in accordance with
the :TAC&
1. The circular said prior to "#+#"**0, dividends distributed b$
domestic companies were taxable in the hands of the shareholder and
tax was deductible at source under the Income#tax Act, "*+"& Cnder
the :TAC, tax was deductible at source on the gross dividend paid out
at the rate of <D or "<D depending upon the extent of shareholding of
the Mauritius resident& Cnder the Income#tax Act, "*+", tax was
deductible at source at the rates specified under section ""<A, etc&
:oubts have been raised regarding the taxation of dividends in the
hands of investors from Mauritius& It is hereb$ clarified that wherever a
Certificate of Residence is issued b$ the Mauritian Authorities, such
certificate will constitute sufficient evidence for accepting the status of
residence as well as beneficial ownership for appl$ing the :TAC
accordingl$&
2. It further said, the test of residence mentioned above would also
appl$ in respect of income from capital gains on sale of shares&
Accordingl$, 1IIs, etc&, which are resident in Mauritius would not be
taxable in India on income from capital gains arising in India on sale of
shares as per paragraph , of article "-& The aforesaid clarification shall
appl$ to all proceedings which are pending at various levels&
)I0 )re## Reea#e & 8ated )-(,("'''2
16050. 'arification regarding agreement for avoidance
of doube ta!ation $it% Mauritiu#
1. A Convention for the avoidance of double taxation and prevention of
fiscal evasion with respect to taxes of income and capital gains was
entered into between the Government of India and the Government of
Mauritius and was notified on +#"'#"*7-& In respect of India, the
Convention applies from the assessment $ear "*7-#7, and onwards&
1. Article "- of the convention deals with taxation of capital gains and
it has five paragraphs& The first paragraph gives the right of taxation of
capital gains on the alienation of immovable propert$ to the countr$ in
which the propert$ is situated& The second and third paragraphs deal
with right of taxation of capital gains on the alienation of movable
propert$ lin9ed with business or professional enterprises and ships and
aircrafts&
2. /aragraph , deals with taxation of capital gains arising from the
alienation of an$ propert$ other than those mentioned in the preceding
paragraphs and gives the right of taxation of capital gains onl$ to that
%tate of which the person deriving the capital gains is a resident& In
terms of paragraph ,, capital gains derived b$ a resident of Mauritius
b$ alienation of shares of companies shall be taxable onl$ in Mauritius
according to Mauritius tax law& Therefore, an$ resident of Mauritius
deriving income from alienation of shares of Indian companies will be
liable to capital gains tax onl$ in Mauritius as per Mauritius tax law and
will not have an$ capital gains tax liabilit$ in India&
3. /aragraph < defines alienation to mean the sale, exchange, transfer
or relin2uishment of the propert$ or the extinguishment of an$ rights
in it or its compulsor$ ac2uisition under an$ law in force in India or in
Mauritius&
'ircuar & %o2 *#" dated -'(-()&&,2
1605'. 'arification regarding ta!ation of income from
dividend# and ca"ita gain# under t%e Indo-Mauritiu#
Doube Ta! Avoidance 'onvention 4DTA'5
1. The provisions of the Indo#Mauritius :TAC of "*7- appl$ to residents
of both India and Mauritius& Article , of the :TAC defines a resident of
one %tate to mean an$ person who, under the laws of that %tate is
liable to taxation therein b$ reason of his domicile, residence, place of
management or an$ other criterion of a similar nature& 1oreign
Institutional Investors and other investment funds, etc&, which are
operating from Mauritius are invariabl$ incorporated in that countr$&
These entities are liable to tax under the Mauritius Tax law and are,
therefore, to be considered as residents of Mauritius in accordance
with the :TAC&
1. /rior to "#+#"**0, dividends distributed b$ domestic companies
were taxable in the hands of the shareholder and tax was deductible at
source under the Income#tax Act, "*+"& Cnder the :TAC, tax was
deductible at source on the gross dividend paid out at the rate of <D
or "<D depending upon the extent of shareholding of the Mauritius
resident& Cnder the Income#tax Act, "*+", tax was deductible at source
at the rates specified under section ""<A, etc& :oubts have been
raised regarding the taxation of dividends in the hands of investors
from Mauritius& It is hereb$ clarified that wherever a Certificate of
Residence is issued b$ the Mauritian Authorities, such Certificate will
constitute sufficient evidence for accepting the status of residence as
well as beneficial ownership for appl$ing the :TAC accordingl$&
2. The test of residence mentioned above would also appl$ in respect
of income from capital gains on sale of shares& Accordingl$, 1IIs, etc&,
which are resident in Mauritius would not be taxable in India on income
from capital gains arising in India on sale of shares as per paragraph ,
of article "-&
'ircuar & %o2 0#& dated )-(,("'''2
CLARIFICATION ONE

Reference is invited to the Circular 6o& 07*, dated "-#,#'888 issued b$
the @oard where it was clarified that wherever the certificate of
residence is issued b$ the Mauritian authorities, such certificate will
constitute sufficient evidence for accepting the status of residence, as
well as beneficial ownership for appl$ing :TAC accordingl$& The said
circular specified the mode of proof of residence of an entit$ in
Mauritius&
Certain doubts have been raised regarding the effect of the aforesaid
circular, particularl$ whether the said circular would also appl$ to
entities which are resident of both India and Mauritius& In order to
remove all doubts on the sub;ect, it is hereb$ clarified that where an
assessee is a resident of both the Contracting %tates, in accordance
with para " of article , of Indo#Mauritius :TAC, then, his residence is to
be determined in accordance with para - of the said article, which
reads as under :
-& 4here, b$ reason of the provisions of paragraph ", a person other
than an individual is resident of both the Contracting %tates, then it
shall be deemed to be a resident of the Contracting %tate in which the
place of effective management is situated&

In view of the above, where an Assessing Efficer finds and is satisfied
that a compan$ or an entit$ is resident of both India and Mauritius, he
would be free to proceed to determine the residential status under
para - of article , of :TAC& 4here it is found as a fact that the
compan$ has its place of effective management in India, then
notwithstanding its being incorporated in Mauritius, it would be taxed
under the :TAC in India&
Circular : 6o& "F'88-, dated "8#'#'88-&