The announcement made by India’s finance minister in his Budget speech on making the TRC “a necessary but not sufficient” condition to avail of the benefits under double taxation avoidance agreements “has created much confusion among investors in India and internationally, including those using Mauritius to do business with India
The Mauritius government, on Tuesday, promised to address India’s concerns over possible misuse of tax avoidance treaty between the two countries, while ensuring its commercial viability on mutually acceptable terms.
“We wish to reiterate that Mauritius is committed and willing to collaborate fully to address the concerns of the Indian side on the DTAC (Double Taxation Avoidance Convention), while ensuring that the treaty remains commercially viable,” Mauritius’ ministry of finance and economic development said.
“We are optimistic that both sides can conclude a mutually acceptable package that would yield a win-win solution,” the ministry said in a statement, while welcoming finance minister P Chidambaram’s statement clarifying the recent concerns over Tax Residency Certificate (TRC) issue.
It said that an announcement made by Chidambaram in his Union Budget presentation on making the TRC “a necessary but not sufficient” condition to avail of the benefits under double taxation avoidance agreements “has created much confusion among investors in India and internationally, including those using Mauritius to do business with India.”
“The (proposed) amendment has been interpreted as providing wide powers to the Indian tax authorities to question the Tax Residency Certificate produced by a resident of a contracting state,” Mauritius said.
The ministry, however, said that India had acted promptly to clarify the situation regarding the validity of the TRC and it had been specified that “the TRC produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the income tax authorities in India will not go beyond the TRC and question his residence status.”
Mauritius, which has been often accused of being used as a conduit for routing of untaxed funds to and from India, said further that a Certificate of Residence delivered by the Mauritian authorities would constitute sufficient evidence for accepting the status of residence as well as beneficial ownership for claiming benefits under Indo-Mauritian DTAC.
The arrangement “continues to be in force pending ongoing discussions between India and Mauritius. Furthermore, we are comforted by the declaration of the Indian minister of finance to the effect that India will not take unilateral action to revise the Mauritius-India DTAC,” it added.
The India-Mauritius Joint Working Group met in December, 2011, and again in August, 2012, to discuss concerns on the operation of the India-Mauritius DTAC.
Mauritius has agreed with India on a Tax Information Exchange Agreement, which incorporates provisions on assistance in the collection of taxes.
The next meeting of the group is scheduled to take place in the last week of this month, in India.
The government could raise between Rs250-Rs300 crore from the stake sale. The government holds 92.5% stake in RCF and the paid-up capital of the company is Rs551.69 crore
The government is set to offload 12.5% stake in Rashtriya Chemicals and Fertilizers (RCF) through the Offer for Sale route on 8th March. The Empowered Group of Ministers (EGoM) on disinvestment, headed by finance minister P Chidambaram, met today and decided on the stake sale.
“EGoM met today and the notice to exchanges will be given today evening and OFS will come day after tomorrow. The government will divest 12.5% stake,” disinvestment secretary Ravi Mathur informed the media.
The finance ministry is considering to sell 12.5% stake or 6.89 crore shares of the company through the OFS route.
Sources said the government could raise between Rs250-Rs300 crore from the stake sale. The government holds 92.5% stake in RCF and the paid-up capital of the company is Rs551.69 crore.
The Cabinet had approved the RCF stake sale in December. The stake sale would help the government inch closer to the disinvestment target for the current fiscal.
As per the revised estimates, the government is likely to raise Rs24,000 crore through stake sale in various PSUs, lower than the budgeted Rs 30,000 crore. So far this fiscal, it has raised over Rs21,500 crore.
In the remaining weeks of the fiscal ending 31st March, the finance ministry plans to sell stake in three more companies — MMTC, SAIL and Nalco.
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