India tightens tax rules for Mauritius investments
New Delhi: The Indian finance ministry has introduced a Principal Purpose Test (PPT) to the India-Mauritius Double Taxation Avoidance Agreement (DTAA), tightening scrutiny on offshore investment structures used by foreign investors. This amendment, effective since August 10, 2026, prohibits the application of treaty benefits if obtaining the benefit was one of the principal purposes of a transaction.
Mauritius, which holds around $185.21 billion (23.82%) of India's total foreign direct investment (FDI) inflows since April 2000, will now face increased regulatory oversight of its offshore investment mechanisms.
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