Speaking to Economic Times, Finance Minister P Chidambaram said that the government has not made any progress in renegotiating a contentious tax treaty with Mauritius. He further added that the Mauritius team that visited India did not have the authority or were not inclined to show any flexibilty and went on to say that he is afraid it is back to the drawing board now.
New Delhi has been pressing Mauritius to renegotiate the double taxation avoidance treaty to prevent misuse. The controversy is largely because of the widespread belief that a substantial quantum of Indian money besides investments from other destinations is being routed through the island nation into India, a phenomenon known as round-tripping, to avoid paying any capital gains tax on investments.
FM further said that they will have to sit down with Ministry of Economic Affairs (MEA) & others to take the process forward.
[source: www.economictimes.indiatimes.com ]