India adds Mauritius tax test for treaty benefit claims
In short
India has added a new tax test in its treaty with Mauritius. From August 2026, tax officials can deny treaty benefits if they think tax relief was the main reason for the investment routing.
This may affect foreign investors who use Mauritius structures. The reporting does not say which deals will be hit or how many.
What the reporting says
India has implemented a Principal Purpose Test in the India-Mauritius Double Taxation Avoidance Agreement, allowing tax authorities to deny treaty benefits if tax relief is a principal purpose. The publisher summary says the amendment becomes effective from August 2026 and may affect foreign investors using Mauritius structures. The immediate consequence is tighter scrutiny of investment routing, while the reporting does not state which investors will be denied benefits or how often.
Why it matters
India has introduced a Principal Purpose Test in the India-Mauritius Double Taxation Avoidance Agreement, according to the publisher summary. Tax authorities may deny benefits where tax relief is a principal purpose, and the change is said to take effect from August 2026. The reported impact is on foreign investors using Mauritius routing and on cumulative FDI flows from Mauritius, but the exact enforcement scope is not stated.