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- India and Mauritius have signed a protocol to amend tax treaty.
- Both nations signed the new protocol on Double Taxation Avoidance Agreement (DTAA) on 7th March 2024.
- This has closed lacuna in their Double Taxation Avoidance Agreement (DTAA).
- This has tightened the scrutiny on tax avoidance on investments coming into India.
- The amendment includes a Principal Purpose Test (PPT).
- PPT is to decide whether a foreign investor is actually eligible for treaty benefits.
- PPT is also to decide if the tax benefit the primary reason to route investments via Mauritius.
- Double Taxation Avoidance Agreement (DTAA) is a bilateral agreement.
- It is aimed at preventing double taxation of income earned in one country by residents of the other country.
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