Taxability of Derivatives – Article 13(4) of India-Mauritius DTAA

3 Sigma Global Fund Vs ACIT (ITAT Mumbai)

Background: The Mumbai Income Tax Appellate Tribunal (ITAT) recently delivered an important decision in the case of M/s 3 Sigma Global Fund v. ACIT concerning the taxability of gains arising from derivative transactions undertaken by a Mauritius-based Foreign Portfolio Investor (FPI). This decision clarifies the applicability of the India–Mauritius Double Taxation Avoidance Agreement (DTAA) to derivative instruments, providing helpful precedent for similarly placed taxpayers.

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