India notifies Mauritius treaty’s principal-purpose test

The notification states that the protocol signed at Port Louis on 7 March 2024 entered into force on 10 August 2026. It directs that its provisions take effect in India in accordance with Article 3, using the powers in section 159(1) of the Income-tax Act 2025. October is therefore the Indian notification stage, not a new signature or entry into force.^[1][4]

A treaty-wide purpose test

The protocol amends the convention signed on 24 August 1982, previously amended in 2016. Article 1 replaces its preamble so that eliminating double taxation is not intended to facilitate avoidance or non-taxation, including arrangements allowing residents of third jurisdictions to obtain treaty relief indirectly.^[1][3]

Article 2 inserts Article 27B, Entitlement to Benefits. A benefit concerning an item of income is refused where the relevant facts reasonably indicate that securing it was one of an arrangement’s or transaction’s principal purposes. This covers benefits obtained indirectly as well as directly. Relief remains possible if granting it is shown to accord with the object and purpose of the relevant treaty provisions.^[1][3]

The new article is added after, rather than substituted for, Article 27A. Introduced by Article 8 of the 2016 protocol, Article 27A restricts the transitional capital-gains benefit in Article 13(3B), including through primary-purpose and shell-company conditions. That benefit concerned gains arising between 1 April 2017 and 31 March 2019 on shares covered by Article 13(3A). Article 27B instead addresses treaty benefits across items of income.^[1][2]

Keep notification and effect separate

Article 3 gives the protocol effect from entry into force, irrespective of the tax-levy date or taxable year. Groups should distinguish that rule from the later Indian notification when reviewing treaty-dependent structures. This brief does not resolve the treatment of every historic investment, grandfathering claim or completed transaction; those require analysis of the relevant provisions and facts.^[1][3]