Indian companies to be taxed as per DTAC

Indian companies having their management in the country would be taxed in India as per Indo-Mauritius Double Taxation Avoidance Convention Agreement even if they are incorporated in Mauritius, Rajya Sabha was informed on Tuesday.

The circular issued on February 10, 2003 has clarified that where it is found as a fact that a company has "its place of effective management in India, then notwithstanding its being incorporated in Mauritius, it would be taxed in India as per Indo-Mauritius DTAC," Finance Minister Jaswant Singh said in a written reply.

Central Board of Direct Taxes had earlier issued a circular on April 13, 2000 to clarify provisions regarding taxation of income from dividends and capital gains under the Indo-Mauritius DTAC.

This circular also specified that a certificate of residence issued by the Mauritian authorities should be regarded as sufficient proof of residence of an entity.

The latest circular was issued to remove any doubts of the earlier circular, Singh said.