The government has formally notified the protocol amending the India–Mauritius tax treaty. Notification No. 135/2026 (S.O. 5611(E)), dated 13 October 2026, issued by the Ministry of Finance (Department of Revenue) under section 159(1) of the Income-tax Act, 2025, gives effect in India to the Protocol signed at Port Louis on 7 March 2024. The Protocol has been in force since 10 August 2026 — so the treaty has already been operating with the new anti-abuse architecture for two months; this notification is the domestic legal switch that implements it.
KEY TAKEAWAY
The treaty now carries a Principal Purpose Test — new Article 27B ("Entitlement to Benefits") — letting tax authorities deny treaty relief where securing that relief was one of the principal purposes of the arrangement, unless granting it fits the object and purpose of the treaty provision. The preamble is also rewritten to shut the door on treaty shopping for the indirect benefit of third-country residents.
What the notification does
The notification is short and operative. It recites that the Protocol — amending the Convention signed at Port Louis on 24 August 1982, as earlier amended by the Protocol of 10 May 2016 — entered into force on 10 August 2026 (the date of the later of the two Article 3 notifications), and then declares that all its provisions "shall be given effect to in the Union of India, in accordance with Article 3 of the said Protocol." The substantive changes sit in the annexed Protocol, which contains exactly three operative articles:
Old position vs new position
The PPT mirrors the BEPS Action 6 minimum standard that India has been rolling into its treaties — the test turns on whether treaty relief was one of the principal purposes, not the sole purpose, but it is not a blanket denial: a taxpayer can still hold the benefit by showing the grant accords with the provision's object and purpose. That two-step structure matters — it is a reasonableness test with an escape hatch, not an automatic disallowance.
WATCH OUT
- No grandfathering clause in this Protocol. The notification and its annexure contain no transitional carve-out for investments made before 1 April 2017. Some news reports suggest pre-April-2017 investments stay protected — that claim is NOT CHECKED against the official text and should not be relied on until verified.
- Retrospective application date. Article 3 applies the Protocol from 10 August 2026 regardless of the taxable year — arrangements already in place are within the test's reach.
- No CBDT circular or explanatory guidance has been issued alongside the notification (as of this draft).
Who is affected
- Foreign portfolio investors (FPIs) and funds routing India exposure through Mauritius entities.
- Private equity and venture capital funds, holding companies and special-purpose vehicles using Mauritius structures for Indian investments.
- Tax and compliance teams claiming treaty relief on dividends, interest or capital gains under the India–Mauritius route.
What to do next
- Stress-test treaty-benefit claims. For every Mauritius-routed structure, ask the PPT question honestly: if a revenue officer looked at all the facts, could obtaining treaty relief be described as one of the arrangement's principal purposes? Where the answer is uncomfortable, build the "object and purpose" defence now, in writing.
- Document commercial substance. Board minutes, decision-making records, business rationale memos and evidence of real economic activity in Mauritius are the currency of a PPT defence.
- Revisit grandfathering assumptions. Do not assume pre-1 April 2017 investments are automatically outside the PPT — the Protocol text itself offers no such carve-out. Get advice before relying on press commentary.
- Watch for CBDT guidance. A clarificatory circular on PPT administration would be the natural next step; none exists yet.
DATES THAT MATTER
- 24 Aug 1982 — India–Mauritius Convention signed
- 10 May 2016 — earlier amending Protocol (recited in this notification)
- 7 Mar 2024 — this Protocol signed at Port Louis
- 10 Aug 2026 — Protocol enters into force; provisions apply from this date
- 13 Oct 2026 — notified in India: Notification No. 135/2026, S.O. 5611(E), F. No. 500/03/2012-FTD-II, signed by Bhaskar Goswami, Joint Secretary
Sources
- CBDT Notifications page, incometaxindia.gov.in — "Notification No. 135/2026 [F. No. 500/03/2012-FTD-II] / SO 5611(E): Notification of Protocol amending the India-Mauritius DTAA", published 13 Oct 2026: https://www.incometaxindia.gov.in/notifications
- Official notification PDF (carries THE GAZETTE OF INDIA: EXTRAORDINARY [PART II—SEC. 3(ii)] header), read in full: https://www.incometaxindia.gov.in/documents/d/guest/notification-no-135-2026-pdf
Verification note: the notification text and annexed Protocol were read in full from the official CBDT PDF on 15 Oct 2026. The egazette.gov.in listing path could not be loaded (site-side errors); the 13 Oct 2026 Gazette publication date is corroborated by the CBDT "Published on" label and the notification's own date line. Claims in press coverage about pre-April-2017 grandfathering protection are NOT CHECKED against the official text. No CBDT explanatory circular found.
