The Finance Ministry has set up a working group to examine consequential issues arising out of recent amendments to the India-Mauritius Double Taxation Avoidance Agreement.

This working group, which will be headed by a Joint Secretary in foreign tax division, has been tasked to submit report to CBDT within three months, an official release said.

The working group would also comprise departmental officers and representatives of SEBI, custodians, brokerage firms and fund mangers, the release added.

Commenting on the latest CBDT move, Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law firm, said this was a proactive step to resolve all the potential issues like taxability of convertible instruments, implementation of exchange of information etc, which may arise in implementation of the amendments, even before they come into effect.

Rahul Jain, Partner, Nangia & Co, a CA firm, said it is good to see that instead of leaving the amended provisions open for interpretation by the taxman as well as taxpayers, the CBDT has constituted a working group of stakeholders.

After the amendments to the Indo-Mauritius DTAA, there are several uncertainties including whether limitation of benefits clause would apply only to transaction of shares and not investment in other securities.

These aspects are of high importance since derivatives account for over 90 per cent of all equity trading in India.

After the recent amendment to Indo-Mauritius DTAA, India now has the right to tax capital gains arising on transfer of shares of Indian resident company.

Srivats.kr@thehindu.co.in

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