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Press Release issued by the Ministry of Finance, Government of India

New Delhi
April 04, 2000

Following the issue of certain demand notices by Income Tax authorities in a few cases of investment via Mauritius, fears have been expressed in many quarters that henceforth all investments by foreign institutional investors through Mauritius would become taxable in India.

It is clarified that this apprehension is unfounded, and that there is no move on the part of the government to revoke or modify the agreement on avoidance of double taxation with Mauritius which would take away the benefits conferred on investors by this Treaty.

The cases in which notices have been issued have been going on for some time, and the views taken by the Assessing Officers pertain to the specifics of each case and do not constitute any across the board denial of tax benefits, or a policy shift.

The CBDT is examining this matter, and is also inviting the representatives of FIIs operating in India to allay their doubts on this subject.

It is further clarified that under the well-established legal system in India, the parties affected by notices from the Assessing Officers have the fullest opportunity of redressal through the appellate system.  The department proposed to take up such cases on a priority basis to ensure their expeditious finalization.