India–Mauritius tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	15 per cent of the gross amount in all other cases — Art. 10(2)(b)	The beneficial owner must be a company which holds directly at least 10 per cent of the capital of the company paying the dividends (Art. 10(2)(a)). Note three things: the holding must be direct, the measure…	Article 10, paragraph 2
Interest	7.5 per cent of the gross amount — Art. 11(2) as replaced by Art. 2(i) of the 2016 Protocol. A single ceiling, expressed to be 'subject to provisions of paragraphs 3, 3A and 4 of this Article'. This is the lowest general interest rate of the eight treaties reviewed here.	Art. 11(3)(a): full exemption in the source State for interest derived and beneficially owned by the government or A local authority of the other Contracting State. Art. 11(3)(b): full exemption for interest…	Article 11, paragraph 2, 3, 3A and 4
Royalties	15 per cent of the gross amount — Art. 12(2). Unchanged by the 2016 Protocol, and the highest royalty ceiling of the eight treaties reviewed here.	Art. 12(2) is drafted without a beneficial-ownership condition: it says simply 'the tax so charged shall not exceed 15 per cent', unlike Arts. 10, 11 and 12A which each require the recipient or beneficial…	Article 12, paragraph 2
Fees for technical services	10 per cent of the gross amount — Art. 12A(2), inserted by Art. 3 of the 2016 Protocol with effect for Indian fiscal years beginning on or after 1 April 2017.	There is no make-available requirement. Art. 12A(3) defines 'fees for technical services' as payments of any kind, other than those mentioned in Articles 14 (Independent Personal Services) and 15 (Dependent…	Article 12A, paragraph 2 (rate); 3 (definition)

Status

In force	Convention signed at Port Louis 24 August 1982; notified 6 December 1983 and, per CBDT Circular No. 682 dated 30-3-1994 reproduced alongside, applies in India from assessment year 1983-84 onwards. The Introduction states it 'has come into force on the notification by both the Contracting States to each other on completion of the procedures required by their respective laws, as required by Article 28' but does not print a date of entry into force. The amending Protocol was signed at Mauritius 10 May 2016 and entered into force 19 July 2016.
Given effect by	G.S.R. 920(E), dated 6-12-1983 — under s.90 of the Income-tax Act 1961 and s.24A of the Companies (Profits) Surtax Act 1964.
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	Absent. There is no principal purpose test anywhere in this Convention. There is no Synthesised Text for India-Mauritius, so MLI Art. 7(1) has not been applied to it, and the 2016 Protocol did not insert a PPT of its own. Of the eight treaties reviewed here this is the only one — other than the USA, where the MLI could never apply — with no PPT. Note that this reflects the position of the instruments as read here at the date of reading; whether any later protocol has since been signed or notified is not established and must be checked before publication.

Dividends

Rate	15 per cent of the gross amount in all other cases — Art. 10(2)(b)
Lower rate on a qualifying holding	5 per cent of the gross amount
The holding that unlocks it	The beneficial owner must be a company which holds directly at least 10 per cent of the capital of the company paying the dividends (Art. 10(2)(a)). Note three things: the holding must be direct, the measure is capital (not voting stock as in the USA treaty, not 'shares' as in Singapore), and the threshold is 10 per cent. At 5 per cent this is the lowest dividend rate of the eight treaties reviewed here.
Where this comes from	Article 10, paragraph 2

Art. 10(3) is an override peculiar to this treaty: notwithstanding para 2, dividends paid by a Mauritius-resident company to an Indian resident may be taxed in Mauritius under Mauritius law for as long as dividends paid by Mauritius-resident companies are allowed as deductible expenses in determining their taxable profits — but the tax charged shall not exceed the rate of Mauritius tax on the profit of the paying company. Art. 10(5) disapplies paras (1), (2) and (3) where the holding is effectively connected with a PE or fixed base.

Interest

Rate	7.5 per cent of the gross amount — Art. 11(2) as replaced by Art. 2(i) of the 2016 Protocol. A single ceiling, expressed to be 'subject to provisions of paragraphs 3, 3A and 4 of this Article'. This is the lowest general interest rate of the eight treaties reviewed here.
Exemptions	Art. 11(3)(a): full exemption in the source State for interest derived and beneficially owned by the government or A local authority of the other Contracting State. Art. 11(3)(b): full exemption for interest derived and beneficially owned by any agency or entity created or organised by the government of the other Contracting State. This is notably wider than the equivalents in the other treaties — it is not confined to a central bank and carries no 'not engaged in commercial activities' qualifier. Art. 11(3)(c) was deleted by Art. 2(ii) of the 2016 Protocol and now reads '[***]'; what it contained is not recoverable from this page. Art. 11(3A), inserted by the 2016 Protocol: exemption for interest derived and beneficially owned by any bank resident in the other State carrying on bona fide banking business — but with a hard sunset: 'this exemption shall apply only if such interest arises from debt-claims existing on or before 31st march, 2017.' Bank interest on any debt-claim created from 1 April 2017 takes the 7.5 per cent rate, not exemption. Quoting the bank exemption without this date is the classic truncation error. Art. 11(4): exemption in the source State to the extent approved by the government of that State, for interest derived and beneficially owned by any person other than a para (3) person, provided the transaction giving rise to the debt-claim has been approved in that regard by the Government of the source State — a double-approval condition.
Where this comes from	Article 11, paragraph 2, 3, 3A and 4

Art. 11(6) disapplies paras (1), (2), (3) and (4) — note it does not list 3A — where the debt-claim is effectively connected with a PE or fixed base. Penalty charges for late payment are excluded from 'interest' (Art. 11(5)).

Royalties

Rate	15 per cent of the gross amount — Art. 12(2). Unchanged by the 2016 Protocol, and the highest royalty ceiling of the eight treaties reviewed here.
Where this comes from	Article 12, paragraph 2

Art. 12(2) is drafted without a beneficial-ownership condition: it says simply 'the tax so charged shall not exceed 15 per cent', unlike Arts. 10, 11 and 12A which each require the recipient or beneficial owner to be a resident of the other State. Art. 12(3) is a single composite definition covering copyright of literary, artistic or scientific work (including cinematograph films, and films or tapes for radio or television broadcasting), patent, trade mark, design or model, plan, secret formula or process, use of industrial, commercial or scientific equipment, and information concerning industrial, commercial or scientific experience. There is no split rate for equipment royalties. Note the practical consequence: at 15 per cent the treaty ceiling for royalties is below the Indian domestic gross rate but well above the 10 per cent available under the Singapore and UAE treaties.

Fees for technical services

Rate	10 per cent of the gross amount — Art. 12A(2), inserted by Art. 3 of the 2016 Protocol with effect for Indian fiscal years beginning on or after 1 April 2017.
Make-available requirement	No
Where this comes from	Article 12A, paragraph 2 (rate); 3 (definition)

There is no make-available requirement. Art. 12A(3) defines 'fees for technical services' as payments of any kind, other than those mentioned in Articles 14 (Independent Personal Services) and 15 (Dependent Personal Services), as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel. That is the whole definition. There is no ancillary-and-subsidiary limb, no make-available limb, no development-and-transfer limb, and — critically — no paragraph of exclusions corresponding to Art. 12(5) of the USA, UK and Singapore treaties. Nothing is carved out for teaching, personal use, sale-linked services, ship or aircraft rental, or payments to employees or individuals. The definition tracks the Indian domestic s.9(1)(vii) formulation almost word for word, so the treaty gives no narrowing of the domestic charge — only a 10 per cent rate cap. Before the 2016 Protocol the treaty had no FTS article at all, and technical service fees fell to Article 7; that route closed for Indian fiscal years beginning on or after 1 April 2017.

Capital gains on shares

Treatment	Two-tier by acquisition date, but achieved by a different drafting technique from Singapore. Art. 13(3A), inserted with effect from 1.4.2017: gains from the alienation of shares acquired on or after 1 april 2017 in a company resident in a Contracting State may be taxed in that state — source taxation. Art. 13(3B): the tax rate on gains within 3A arising during the period beginning 1 April 2017 and ending 31 March 2019 shall not exceed 50 per cent of the tax rate applicable on such gains in the State of residence of the company whose shares are alienated. Art. 13(4), as replaced: gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 3A shall be taxable only in the Contracting State of which the alienator is a resident.
Grandfathering	Shares acquired before 1 april 2017 are grandfathered — but by omission, not by an express saving clause. There is no Mauritius equivalent of Singapore's Art. 13(4A). Such shares simply fall outside Art. 13(3A), and therefore drop into the residual Art. 13(4), which allocates the gain exclusively to the alienator's State of residence. The grandfathering has no sunset. The mechanism matters: because it operates through the residual paragraph rather than through a dedicated benefit-conferring paragraph, Article 27A — which by its terms limits only 'the benefits of Article 13(3B)' — does not reach it.
Conditions	This is the most consequential divergence from singapore. Article 27A (Limitation of Benefits) applies only to Article 13(3B) — the 1 April 2017 to 31 March 2019 half-rate window. It says so four times, once in each of paragraphs 1 to 4, and nowhere refers to Art. 13(4) or to pre-April-2017 shares. Its terms: (1) a resident is not entitled to Art. 13(3B) benefits if its affairs were arranged with the primary purpose to take advantage of them; (2) a shell/conduit company is not entitled to Art. 13(3B) benefits, a shell/conduit company being any legal entity within the definition of resident with negligible or nil business operations or with no real and continuous business activities carried out in that State; (3) a resident is deemed to be a shell/conduit company if its expenditure on operations in that State is less than Mauritian Rs 15,00,000 or Indian Rs 27,00,000, as the case may be, in the immediately preceding period of 12 months from the date the gains arise — a single 12-month test, not Singapore's two consecutive 12-month periods; (4) a resident is deemed not to be a shell/conduit company if (a) it is listed on a recognised stock exchange of that State, or (b) its expenditure on operations there equals or exceeds those figures over the same 12 months. An explanation closes the article: 'The cases of legal entities not having bona fide business activities shall be covered by Article 27A(1) of the Convention.' Note that Art. 27A does not define 'recognised stock exchange' — unlike Singapore's Art. 24A(5), which does.
Where this comes from	Article 13 (gains); 27A (limitation), paragraph 13(3A), 13(3B), 13(4); 27A(1)-(4) and Explanation

Permanent establishment

Construction or installation PE	More than nine months for a building site or construction or assembly project, or supervisory activities in connection therewith — Art. 5(2)(i). Like the UAE treaty, the word 'installation' is absent from the list.
Service PE	More than 90 days within any 12-month period, and only where the activities continue for the same or connected project — Art. 5(2)(j), inserted by Art. 1 of the 2016 Protocol with effect for Indian fiscal years beginning on or after 1 April 2017. Before that date the treaty had no service PE limb at all. There is no reduced threshold for services to a related enterprise.
Agency PE	True
Where this comes from	Article 5

Agency PE at Art. 5(4) has only two limbs: (i) habitual exercise of an authority to conclude contracts in the name of the enterprise (narrower than the UK's 'negotiate and enter into ... For or on behalf of'), unless limited to purchasing; and (ii) habitual maintenance of a stock from which the agent regularly fulfils orders on behalf of the enterprise. There is no habitually-securing-orders limb. Art. 5(5) removes independent-agent status only where the agent's activities are devoted exclusively or almost exclusively to the enterprise — 'exclusively' is a higher bar than the 'wholly or almost wholly' used in the USA, UK, Singapore and UAE treaties. Art. 5(3) preparatory/auxiliary exclusions carry no anti-fragmentation proviso of the Singapore kind, and because there is no synthesised text the MLI has not supplied one. Art. 5(2)(f) treats a warehouse as a PE only 'in relation to a person providing storage facilities for others'.

Anti-abuse: limitation of benefits, and the MLI

LOB	Article 27A (Limitation of Benefits), inserted by Art. 8 of the 2016 Protocol. Its reach is narrow: it limits only the benefits of Article 13(3B). It does not limit the Art. 13(4) residence-State allocation for pre-April-2017 shares, and it does not limit dividends, interest, royalties, fees for technical services or anything else in the Convention. Full terms are set out under capital_gains_shares.conditions.
PPT	Absent. There is no principal purpose test anywhere in this Convention. There is no Synthesised Text for India-Mauritius, so MLI Art. 7(1) has not been applied to it, and the 2016 Protocol did not insert a PPT of its own. Of the eight treaties reviewed here this is the only one — other than the USA, where the MLI could never apply — with no PPT. Note that this reflects the position of the instruments as read here at the date of reading; whether any later protocol has since been signed or notified is not established and must be checked before publication.
Subject to tax	No subject-to-tax clause. Art. 4(1) uses the orthodox formula — any person who under the laws of that State is liable to taxation therein by reason of domicile, residence, place of management or any other criterion of similar nature — but, unlike the UK's Art. 4(1)(a), it carries no exclusion for persons liable to tax only on source income, and, unlike the UK's Art. 4(1)(b), no partnership/estate/trust look-through. Art. 4(2) is the individual tie-breaker and Art. 4(3) retains the place-of-effective-management tie-breaker for non-individuals.
Where this comes from	Article 27A

No Synthesised Text exists for India-Mauritius. The India-Mauritius Convention is therefore not shown as a Covered Tax Agreement modified by the MLI, and none of the MLI's provisions — preamble, PPT, dual-resident rule, anti-fragmentation rule — appear anywhere in the text. The bilateral 2016 Protocol did the anti-abuse work instead, and it did far less of it than the MLI would have.

The protocols, in order

A treaty read without its protocols is a wrong answer.

Notification No. S.O. 2680(E) [No. 68/2016 (F. No. 500/3/2012-ftd-II)], dated 10-8-2016 — gives effect to the Protocol signed at Mauritius on 10 May 2016, which entered into force 19 July 2016 under Art. 9(1) of the Protocol. Its nine articles: Art. 1 inserted the service PE limb at Convention Art. 5(2)(j); Art. 2 replaced Art. 11(2) with the 7.5 per cent interest ceiling, deleted Art. 11(3)(c) and inserted Art. 11(3A) (bank exemption limited to pre-1-April-2017 debt-claims); Art. 3 inserted the whole of new Article 12A (Fees for Technical Services); Art. 4 amended Article 13 with effect from 1.4.2017 by inserting paras 3A and 3B and replacing para 4; Art. 5 inserted Art. 22(3) (source taxation of other income); Art. 6 replaced Art. 26 (Exchange of Information); Art. 7 inserted Art. 26A (Assistance in the Collection of Taxes); Art. 8 inserted Art. 27A (Limitation of Benefits); Art. 9 set entry into force and effect.
Staggered effect dates under Art. 9 of the 2016 Protocol, and they differ by article — this is routinely got wrong. Arts. 1, 2, 3, 5 and 8 (service PE, interest, FTS, other income, LOB) have effect in India in respect of income derived in any fiscal year beginning on or after 1 April next following entry into force (i.e. FY 2017-18 onwards) and in Mauritius for fiscal years beginning on or after 1 July next following. Art. 4 (capital gains) has effect in both states for assessment year 2018-19 and subsequent assessment years — an assessment-year test, not a fiscal-year test, and not aligned with the other articles. Arts. 6 and 7 (exchange of information, collection assistance) have effect from the date of entry into force without regard to the date on which the taxes are levied or the taxable years to which they relate.
No later amending notification appears in the sources used here. The notification line on the Introduction reads 'GSR 920(E), dated 6-12-1983 as amended by Notification No. S.O. 2680(E) ... Dated 10-8-2016' and names nothing else.

The words themselves

Quoted from the treaty as notified.

Gains from the alienation of shares acquired on or after 1st April 2017 in a company which is resident of a Contracting State may be taxed in that State.

Article 13, paragraph 3A of the treaty as notified.

Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 3A shall be taxable only in the Contracting State of which the alienator is a resident.

Article 13, paragraph 4 of the treaty as notified.

However, the tax rate on the gains referred to in paragraph 3A of this Article and arising during the period beginning on 1st April, 2017 and ending on 31st March, 2019 shall not exceed 50% of the tax rate applicable on such gains in the State of residence of the company whose shares are being alienated;

Article 13, paragraph 3B of the treaty as notified.

A resident of a Contracting State shall not be entitled to the benefits of Article 13(3B) of this Convention if its affairs were arranged with the primary purpose to take advantage of the benefits in Article 13(3B) of this Convention.

Article 27A, paragraph 1 of the treaty as notified.

A resident of a Contracting State is deemed to be a shell/conduit company if its expenditure on operations in that Contracting State is less than Mauritian Rs.1,500,000 or Indian Rs. 2,700,000 in the respective Contracting State as the case may be, in the immediately preceding period of 12 months from the date the gains arise.

Article 27A, paragraph 3 of the treaty as notified.

The term "fees for technical services" as used in the Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Convention as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

Article 12A, paragraph 3 of the treaty as notified.

However, this exemption shall apply only if such interest arises from debt-claims existing on or before 31st March, 2017.

Article 11, paragraph 3A of the treaty as notified.

For the purposes of this article, the term "alienation" means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting States.

Article 13, paragraph 5 of the treaty as notified.

What to watch

Article 27A limits only Article 13(3B). It does not condition the grandfathering of pre-1-April-2017 shares. This is the single most important structural difference between the Mauritius and Singapore treaties, and it cuts the opposite way to what most summaries assume: Singapore's Art. 24A expressly gates both the grandfathering (4A) and the concessional window (4C), whereas Mauritius gates only the concessional window. A Mauritius entity holding pre-April-2017 shares does not have to clear the expenditure test in the treaty at all.
Because Art. 13(3B) expired on 31 March 2019, Article 27A now has no operative field left in the treaty. It is, on its own terms, a spent provision.
That leaves the pre-April-2017 Mauritius grandfathering with no treaty-level anti-abuse gate: no Art. 27A (wrong paragraph), no PPT (no MLI synthesised text, no bilateral PPT). Whatever challenge is mounted against such a claim has to come from Indian domestic law — GAAR, s.9(1)(i) and Explanation 5, beneficial ownership, or the general law on colourable devices — not from the Convention.
The grandfathering works by omission. Pre-April-2017 shares are not mentioned anywhere; they qualify because Art. 13(3A) does not catch them and Art. 13(4) sweeps up everything not caught by paras 1, 2, 3 and 3A. Anyone looking for a Mauritius equivalent of Singapore's Art. 13(4A) will not find one, and should not conclude from its absence that the grandfathering does not exist.
The Art. 27A expenditure test, where it does apply, is a single 12-month look-back (Mauritian Rs 15,00,000 / Indian Rs 27,00,000). Singapore's equivalent for its grandfathering is each of two consecutive 12-month periods at S$200,000 / Indian Rs 50,00,000. Different periods, different amounts, different scope — the two articles must not be read across.
Article 12A has no make-available test and no exclusions paragraph. It is the broadest FTS article of the eight. A Mauritius service provider gets a 10 per cent rate cap and nothing else; services that would fall outside the USA, UK or Singapore FTS definitions for want of make-available are squarely inside this one.
Article 12A only took effect for Indian fiscal years beginning on or after 1 April 2017. For earlier years the treaty had no FTS article, and technical service fees were taxable in India only through a PE under Article 7.
The Art. 11(3A) bank exemption is dead for new lending. It applies only to debt-claims existing on or before 31 march 2017. Any facility drawn after that date takes 7.5 per cent.
The dividend rate of 5 per cent (on a direct 10 per cent capital holding) is the lowest in this set, but the royalty rate of 15 per cent is the highest. The two move in opposite directions from what a reader who has just come from the Singapore treaty would expect.
The 2016 Protocol's effect dates are staggered and the capital gains article is on a different clock from everything else: Art. 4 of the Protocol (capital gains) runs by assessment year — AY 2018-19 onwards — while Arts. 1, 2, 3, 5 and 8 run by fiscal year of income. Applying one date to all of them produces wrong answers in FY 2017-18.
Article 22(3), inserted by the 2016 Protocol, gives the source State a taxing right over items of income not dealt with in the foregoing Articles. Combined with the absence of an FTS make-available test, very little escapes Indian source taxation under this treaty now.
CBDT Circular No. 682 dated 30-3-1994, reproduced on the Protocol page, states the pre-2016 position — that a Mauritius resident alienating shares of Indian companies is liable to capital gains tax only in Mauritius. It has been overtaken for shares acquired on or after 1 April 2017 and should never be cited without that qualification.

What this page does not tell you. Article 23 (Elimination of Double Taxation), Article 24 (Non-Discrimination) and Article 25 (map) were not read line by line. The date of entry into force of the original 1982 Convention is not printed on the Introduction page; only the notification date (6-12-1983) and the Circular No. 682 statement that it applies in India from AY 1983-84. The deleted Art. 11(3)(c) is shown as '[***]' and its original content is not recoverable here. Article 27A does not define 'recognised stock exchange' and no definition was found elsewhere in the Convention. Most importantly: no amending instrument after the 2016 Protocol appears in the sources used here, and no synthesised text. Whether any later protocol has been signed, entered into force or been notified since — and in particular whether any principal purpose test has since been introduced — cannot be established from this source and must be verified against CBDT notifications before anything is published on the anti-abuse position. The Gazette page reference for G.S.R. 920(E) is not printed. No most-favoured-nation clause was found in the Convention or the 2016 Protocol, both of which were read.

The India–Mauritius tax treaty