Govt resumes talks on tax treaty: FM

 A day after the stocks fell over 300 points, the government on Tuesday said it has resumed talks with Mauritius for re-negotiation of the 30-year-old Double Taxation Avoidance Agreement (DTAA).

"As far as DTAA with Mauritius is concerned, it is nothing new. It is an old one. For some time talks were suspended. Now it is resumed," FM Pranab Mukherjee told reporters.

While India has been pressing for re-negotiating Mauritius DTAA seeking to plug the loopholes and revenue leakages, some experts have raised concerns that the move may impact the foreign direct investment into the country.

Economic affairs secretary R Gopalan, however, said, "One agreement would not make any difference on FDI inflows ." India receives 42% of its FDI routed through Mauritius.

Similarly, about 40%of the FII fund flow is also routed through the island nation . A large majority of them are third country investors that use DTAA for saving capital gains tax as the treaty provides an exemption . TNN