India working on anti-abuse provisions in tax treaties

India is considering to plug loopholes in double tax avoidance treaties with other nations by introducing anti-abuse rules in the agreements negotiated prior to 2004.

India is considering to plug loopholes in double tax avoidance treaties with other nations by introducing anti-abuse rules in the agreements negotiated prior to 2004.

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Already, Double Taxation Avoidance Treaties (DTAA) negotiated since 2004 have anti-abuse rules, official sources
said.

Anti-abuse rules are incorporated in the form of imposing limitations on the tax benefit provisions in the DTAAs, the sources said.

However, treaties negotiated prior to 2004 like those with Mauritius do not have these provisions, sources said.

To sort out the gap, a joint working group was constituted in 2006 to suggest safeguards for preventing possible misuse of the India Mauritius Double Taxation Avoidance Treaty, they said.

India has so far signed DTTAs with 76 countries. The tax treaties with Netherland, Australia, Cyprus and the US were signed before 2004 while that with Singapore was signed after 2004.