On Wednesday, Finance Minister Nirmala Sitharaman told Parliament that India has re‑written its tax treaties with Mauritius, Singapore and Cyprus, moving capital gains on shares to the source country for all acquisitions made on or after 1 April 2017. The move overturns the earlier 2016 Mauritius protocol, which had let investors in those jurisdictions claim that gains were taxable only where they lived. The amendment now lets India tax those gains at source, boosting the tax base by an estimated ₹4,200 crore annually.
The change responds to long‑standing concerns that treaty havens were being used to dodge Indian tax. A 2026 Supreme Court ruling on a Mauritius‑based investor highlighted how the 2016 protocol had effectively shifted the tax burden away from India. The new provisions also include limits on benefits for entities set up solely for tax advantages.
But the impact is felt on a human level too. A Mumbai‑based fintech firm that sold shares to a Mauritius entity will now owe Indian tax on the gains, a shift that could change the way foreign investors structure their holdings. The company’s CFO, Anil Mehta, said he was "relieved to see the clarity" but wary of the new compliance costs.
The amendments are now in force, and the Ministry of Finance will issue detailed guidelines within the next fortnight. Investors will need to adjust their filing procedures, while India’s tax authorities will monitor for treaty abuse. The government hopes the changes will close loopholes and raise an additional ₹4,200 crore in revenue over the next fiscal year.