India-Mauritius DTAA Amended to Prevent Tax Avoidance and Treaty Abuse: New Article 27B Introduces Anti-Abuse Rules:

The Ministry of Finance (Department of Revenue) has released a notification dated October 13, 2026, notifying all the provisions of the Protocol amending the Double Taxation Avoidance Convention (DTAC) between the Government of the Republic of India and the Government of Mauritius for the purpose of avoiding double taxation and curbing fiscal evasion.

The central government has issued this notification in exercise of its powers granted under Section 159(1) of the Income-tax Act, 2025, to give effect to the amendments introduced through the Protocol signed at Port Louis on March 7, 2024.

The Protocol had come into force on August 10, 2026, following the completion of the required legal procedures by both countries. These amendments are aimed towards preventing double taxation while ensuring that the tax treaty is not misused to obtain unintended tax benefits through tax avoidance, tax evasion or treaty-shopping arrangements.

A key amendment replaces the existing preamble of the Convention. The revised preamble clarifies that the treaty is intended to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance. It specifically addresses arrangements designed to obtain treaty benefits indirectly for residents of third countries.

The Protocol also introduces a new Article 27B titled “Entitlement to Benefits” after Article 27A of the Convention. Under this provision, treaty benefits may be denied for an item of income if, considering all relevant facts and circumstances, it is reasonable to conclude that obtaining such benefits was one of the principal purposes of an arrangement or transaction.

However, treaty benefits may still be granted if it is established that allowing them would be consistent with the objectives and purpose of the relevant treaty provisions. The convention has been amended by inserting after Article 27A the following new Article: “Article 27B ENTITLEMENT TO BENEFITS Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention.”

As per Article 3 of the Protocol, the amendments take effect from August 10, 2026, irrespective of when the taxes are levied or the relevant tax years to which they relate. The changes strengthen safeguards against treaty misuse while preserving the objective of preventing double taxation between India and Mauritius.