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This is an archive article published on March 2, 2013
Govt clarifies rules of Mauritius investments
A day after stock markets were spooked by a clause in the Budget that could be interpreted as making incomes of investors using the Mauritius route taxable,the finance ministry issued a clarification.
A day after stock markets were spooked by a clause in the Budget that could be interpreted as making incomes of investors using the Mauritius route taxable,the finance ministry issued a clarification.
The ministry on Friday said an investor from Mauritius putting money in Indian markets needed to only produce a tax residency certificate TRC to claim the benefit of the double taxation avoidance agreement. The budget had said TRC was no longer enough; proof was needed that the beneficial ownership of the investment too lay with the same person.
The government was expected to move an amendment in the Finance Bill to reflect the clarification.
Since a concern has been expressed about the language of sub-section 5 of Section 90 of I-T Act,this concern will be addressed suitably when the Finance Bill is taken up for consideration, the ministry statement said.
Finance ministry sources said the clause was introduced in the Bill by the tax department quite late in the run-up to the budget. The department argued that it had figured last year as well,but neglected to tell Finance Minister P Chidambaram that in Budget 2012-13,it was part of the statement of objects and reason,whereas in Budget 2013-14,it had been moved into the body of the Bill itself.
Markets recovered after the clarification. The Sensex,which had fallen 291 points on Thursday closed 57 points up.
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