Why an India-Mauritius tax amendment triggered a stock market slide
Finshots Daily
Adapting Tax Laws to Prevent Revenue Loss
The Indian government observed a loss in tax revenue due to certain tax exemptions under the DTWA that protected investors. To address this, the government made changes stating that Mauritian entities would no longer receive tax exemptions if acquiring shares in India post-April 1, 2017. Subsequently, an amendment required Mauritian entities to pass a principal purpose test to enjoy lower taxes. As a result, Mauritius, once the top source of FDI inflows into India, saw a significant decline in investments.
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