India Restructures International Tax Treaties with Mauritius, Singapore and Cyprus

India has successfully renegotiated its tax treaties with Mauritius, Singapore and Cyprus to restore its right to tax capital gains originating from investments in India at the source, Finance Minister Nirmala Sitharaman announced on Wednesday, 16 September.

Speaking at the eighth International Tax Conference in Bengaluru, organised by the International Tax Research and Analysis Foundation, Sitharaman confirmed that the overhauls form part of wider initiatives to fortify India’s tax base and block the exploitation of treaty loopholes.

Under the previous framework, certain jurisdiction-based investors—most notably those operating out of Mauritius—could occasionally claim that share-sale capital gains in Indian companies were exclusively taxable in their resident nation, thereby restricting India’s taxation authority.

Addressing these historical limitations, India formally amended its Mauritius tax treaty via a 2016 protocol.

This transition shifted share capital gains taxation for acquisitions made from April 1, 2017 toward the source country, while pre-existing investments were safeguarded under historical grandfathering provisions.

Comparable modifications were subsequently applied to the Singapore and Cyprus pacts.

Furthermore, the updated amendments incorporate safeguards designed to curb treaty abuse, specifically targeting entities established primarily for securing tax advantages by restricting their available benefits.

Highlighting the broader scope of regulatory reform, Sitharaman additionally pointed to other key additions within India’s international tax architecture.

These include the introduction of the General Anti-Avoidance Rules (GAAR), the adoption of the Multilateral Instrument (MLI), the wider roll-out of the Advance Pricing Agreement (APA) programme, and the establishment of new safe harbour provisions.

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