Authority for Advance Rulings: Capital gains exemption available under India-Mauritius tax treaty

The Authority for Advance Rulings (“AAR”) in the case of Dow AgroSciences Agricultural Products Limited, has re-affirmed that capital gains earned by a Mauritian company (Global Business Licence 1) from transfer of shares of an Indian company shall not be taxable in India, unless the Mauritian company has a Permanent Establishment in India.

AAR also ruled that an investment through a Mauritian subsidiary which has been held for long period of time cannot be considered to be a device for tax avoidance.

Source: AAR rulings