Indo-Mauritius DTAA

The amendment to the Indo-Mauritius Double-Taxation Avoidance agreement to ensure that capital gains arising in India are taxed in India was released on 10th May. I was leaving for India the next morning. So, I did not have the time to blog on it. But, I do not have to worry. Andy Mukherjee has done a fabulous job of writing on it, in his Gadfly columns. you can read it here. He notes:

What’s more notable is that the Indian government managed to communicate its intention without causing a stock-market rout. That means one of two things: Either the plan really is an honest effort to flush dodgy money out of the stock market; or the devil is in the fine print, and nobody has quite grasped it yet. We’d all better hope it’s the former.

Also, on the passing of the bankruptcy bill, I shall leave it to Andy Mukherjee to do the honours. He is referring to the week ending May 13.

Two major economic reforms in India that have been pending for more than a decade were done over just two days this week. First, New Delhi persuaded Mauritius to stop allowing domestic Indian money from leaving the country and coming back in the garb of tax-free foreign investment. Now, India’s parliament has passed the much-awaited bankruptcy code, finally embracing a modern solution to the twin problems of corporate indebtedness and loan under-recoveries.

Put the duo together, and India should have the basic elements in place for a capital market that’s got less dodgy money and treats gains on capital equally, regardless of whether the investors are locals or foreigners.





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