Domestic companies routing their investments through Mauritius may soon have to pay capital gains tax as the tax authorities are pressing for checking the misuse of the tax treaty with the island nation. The Central Board of Direct Taxes (CBDT) suspects that the government is losing large amount of revenue due to routing of investments by domestic firms through Mauritius.
Capital gains tax is a levy payable on the profit from sale of assets, investments, capital accumulation etc.
“The government would soon press for a review of the capital gains tax provisions in its tax treaty with Mauritius.
The main reason cited by the CBDT is suspected round-tripping of funds and also loss of revenue, particularly in the case of large investments,” a finance ministry official told.