India Revamps Tax Treaties with Mauritius, Singapore and Cyprus to Regain Capital Gains Control
Key Highlights
- India renegotiates tax treaties with Mauritius, Singapore, and Cyprus to restore right to tax capital gains from Indian investments.
- Changes aim to strengthen India's tax base and prevent treaty abuse.
- Amendments apply to investments made after April 1, 2026.
Finance Minister Nirmala Sitharaman announced on Wednesday that India has renegotiated its tax treaties with Mauritius. Singapore, and Cyprus to restore the country's right to tax capital gains arising from investments in India at the source.
The changes were part of wider efforts to strengthen the country's tax base and prevent the misuse of treaty provisions. Under the earlier arrangements, investors based in some jurisdictions, particularly Mauritius, could claim that capital gains from the sale of shares in Indian companies were taxable only in their country of residence.
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The India-Mauritius tax treaty was amended through a protocol signed in 2016. Shifting the taxation of capital gains on shares acquired on or after April 1, 2017, towards the source country, India. Investments made before that date were grandfathered under the earlier provisions.
Similar changes were made in India's tax treaties with Singapore and Cyprus. The amendments were accompanied by provisions aimed at preventing treaty abuse. This includes limitations on benefits available to entities that were established primarily to obtain tax advantages.
The use of treaty jurisdictions for routing investments into India has been a longstanding concern. In 2026, the Supreme Court examined the evolution of India's treaty framework and noted that the 2016 Mauritius protocol had shifted the taxation of relevant capital gains from a residence-based system to a source-based one.
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No official reactions were available at press time. The Ministry of Finance did not respond to questions about the implications of these changes on Indian businesses and investors.
The amendments are expected to take effect on April 1, 2026, and will apply to investments made after that date. The government has not specified how this change will impact the tax revenue of Indian companies.
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I write about the forces shaping business and the global economy, from startup growth and changing markets to international trade and policy. My work focuses on breaking down complex developments into clear, practical insights and understanding what they could mean for businesses, investors, and the wider economy.
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