Singapore VCC insights

India-Mauritius Tax Treaty Protocol: PPT in Force and the Singapore Route

By VCC Editorial Team · Published 18 October 2026

Short answer: India has notified (S.O. 5611(E), 13 October 2026) that the 2024 India-Mauritius Protocol entered into force on 10 August 2026, adding a principal purpose test (Article 27B) and an anti-treaty-shopping preamble. The India-Singapore treaty already carries the same test through the multilateral instrument (MLI), plus a limitation of benefits clause on grandfathered gains.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

The India-Mauritius tax treaty protocol signed in 2024 has finally completed its Indian formalities: India has notified that it entered into force on 10 August 2026, inserting a principal purpose test (PPT). This article sets out what the Protocol does, what is and is not confirmed on each side, how it compares with the India-Singapore treaty, what substance a Singapore variable capital company (VCC) or section 13O or 13U fund investing into India needs, and when moving a Mauritius vehicle to Singapore is worth considering. All sources below were checked on 18 October 2026.

What does the 2024 India-Mauritius tax treaty protocol change?

It replaces the treaty preamble with anti-treaty-shopping wording and inserts Article 27B, a PPT that can deny any treaty benefit. It does not change the 2016 capital gains settlement or the withholding rate caps.

Article 27B provides that a benefit “shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit”, unless granting it accords with the object and purpose of the relevant provisions. Two features matter. The test is “one of the principal purposes”, so a genuine commercial rationale does not save an arrangement where treaty access was also a principal driver. And because Article 3(2) disregards the taxable year, existing structures are tested on income arising after entry into force; there is no carve-out for legacy holdings in the Protocol text.

Unchanged: under Article 13(3A), gains on shares acquired on or after 1 April 2017 in an Indian company may be taxed in India, while Article 13(4) keeps other gains, in effect including pre-2017 shares, taxable only in the residence state. Dividends are capped at 5% for a company beneficial owner holding at least 10% of the capital (15% otherwise) and interest at 7.5%.

Is the India-Mauritius Protocol in force, and what is still unconfirmed?

For India, yes: the notification states that the Protocol “entered into force on the 10th day of August, 2026”, the date of the later of the two governments’ notifications. The Mauritian domestic commencement notice had not been published as at 18 October 2026.

In a communiqué of 17 April 2024 the Mauritius Revenue Authority (MRA) said the Protocol “is yet to be ratified by Mauritius”. Mauritius then made the Double Taxation Avoidance Agreement (India) (Amendment) Regulations 2026 on 29 July 2026; regulation 6 says the Protocol “shall come into operation on such date as the Minister may specify in a notice to be published in the Gazette”. The MRA treaty page lists an India “Amendment/s through protocol (2026)” but no commencement notice. India’s notification was issued under section 159(1) of India’s Income-tax Act, 2025. One wrinkle: the Income Tax Department’s consolidated treaty text annotates the new preamble and Article 27B “w.e.f. 13-10-2026”, the notification date, whereas the Protocol takes effect from entry into force. For income arising between 10 August and 13 October 2026, take Indian advice on which date will be applied.

Step	Date	Source	Status at 18 October 2026
Protocol signed	7 March 2024	Protocol text	Confirmed
MRA: not yet ratified by Mauritius	17 April 2024	MRA communiqué	Superseded
Mauritius regulations (GN No. 136 of 2026)	29 July 2026	MRA	Confirmed
Entry into force	10 August 2026	India S.O. 5611(E)	Confirmed by India
India gives effect	13 October 2026	India S.O. 5611(E)	Confirmed
Mauritius ministerial commencement notice	Not published	GN No. 136 of 2026, reg. 6	Not confirmed

How does India apply the principal purpose test to grandfathered investments?

India’s published position is that the PPT is prospective and does not reach the pre-April 2017 grandfathering in the Mauritius, Singapore and Cyprus treaties. That position comes from guidance issued before the Protocol, not from the Protocol itself.

CBDT Circular No. 01/2025 says a bilaterally inserted PPT applies “from the date of entry into force of the DTAA or the Amending Protocol incorporating the PPT”. It names the three treaties’ “grandfathering provisions” and states they “shall remain outside the purview of the PPT provision, being governed, instead, by the specific provisions in this regard of the respective DTAA itself”. Officers may refer to the BEPS Action 6 Final Report and the UN Model commentary on Articles 1 and 29 (2021 update), subject to India’s reservations.

So pre-2017 Mauritius holdings keep two layers of protection; dividends, interest and post-2017 gains do not. The treaty’s existing limitation of benefits clause, Article 27A, is narrow: as drafted it applies only to the expired reduced-rate benefit in Article 13(3B) (gains from 1 April 2017 to 31 March 2019), with thresholds of Mauritian Rs 1,500,000 or Indian Rs 2,700,000. Article 27B is now the treaty’s general anti-abuse rule.

How does the India-Singapore treaty compare on PPT, LOB and capital gains?

Singapore reached the same PPT position earlier, through the MLI, and its limitation of benefits (LOB) clause still governs grandfathered gains.

The Third Protocol (signed 30 December 2016, in force 27 February 2017, capital gains and LOB articles from 1 April 2017) inserted Article 13(4A) (pre-1 April 2017 shares taxable only in the residence state) and Article 13(4B) (later shares may be taxed at source). Article 24A denies the 13(4A) benefit to a resident whose affairs were arranged “with the primary purpose” of taking it, and to a “shell or conduit company”. A Singapore resident is deemed a shell if its annual expenditure on operations in Singapore is below S$200,000 for each 12-month period in the 24 months before the gain, unless listed on the Singapore exchange. The MLI added Article 29A, “Prevention of Treaty Abuse”, with PPT wording matching Article 27B, effective in Singapore from 1 January 2020 for withholding taxes and for basis periods beginning on or after 1 April 2020 otherwise. Article 28A preserves domestic anti-avoidance rules.

Feature	India-Mauritius	India-Singapore
PPT	Article 27B, bilateral Protocol; in force 10 August 2026 per India	Article 29A via MLI; Singapore effect from 1 January 2020 (withholding)
Pre-1 April 2017 shares	Residence state only (Article 13(4))	Residence state only (Article 13(4A))
Later shares	May be taxed in India (Article 13(3A))	May be taxed in India (Article 13(4B))
LOB on grandfathered gains	None; Article 27A covers only expired 13(3B)	Article 24A, S$200,000 expenditure test over 24 months
Dividend cap	5% (10% capital holding), 15% otherwise	10% (25% shareholding), 15% otherwise
Interest cap	7.5%	10% (bank or similar), 15% otherwise

For post-2017 investment, neither hub has a capital gains treaty edge and both carry the same PPT. The differences are the rate caps, the cost of the Singapore LOB on legacy holdings, and how convincingly the vehicle is managed in the hub. Our review of Singapore’s treaty network for family office holding companies covers the wider picture.

What substance does a Singapore VCC, 13O or 13U fund need for India-Singapore treaty benefits?

A Singapore certificate of residence, real management and control in Singapore, and a rationale that survives the PPT; for legacy gains, also the Article 24A expenditure test.

The Inland Revenue Authority of Singapore (IRAS) treats a VCC as a company and determines a sub-fund’s residence at the umbrella level; the VCC applies for the certificate. IRAS says foreign-owned investment holding companies “with purely passive sources of income and/or receiving only foreign-sourced income” are generally not resident, but may qualify if strategic decisions are made in Singapore and they have a Singapore-based executive, non-nominee director, a Singapore-based key employee, or management by a related Singapore company. See our sub-fund certificate of residence workflow.

On the PPT, IRAS’s e-Tax Guide on double taxation agreements (fourth edition, 30 January 2026) says it is invoked only where obtaining benefits “in an improper and abusive manner” was a principal purpose, and that where an arrangement “is connected with a core commercial activity and its form is not contrived” that conclusion would not be reasonable. India’s circular requires an “objective assessment of the relevant facts and circumstances”; as source state, India’s view decides the withholding outcome.

For a single family office fund, the Monetary Authority of Singapore (MAS) lists “S$20 million in Designated Investments (DI)” for sections 13O and 13OA and “S$50 million in Designated Investments” for section 13U, plus qualifying investment professionals. Meeting them supports a commercial case for Singapore but does not answer the PPT alone (see minimum AUM for a Singapore family office). A defensible India-facing file usually holds:

1. Board minutes showing Indian investment, exit and financing decisions taken in Singapore, with directors’ locations recorded.
2. The manager’s licence or exemption and the investment team’s Singapore employment.
3. An operating-expenditure schedule tested against S$200,000 for each 12-month period in the prior 24 months, for legacy shares.
4. A written rationale for the Singapore platform beyond India: other markets, investors, banking, custody and sub-fund structure.
5. Certificates of residence for each year in which Indian income or gains arise.

When does re-domiciling a Mauritius fund to Singapore make sense?

When the investment management and decision-makers are already in Singapore and the vehicle should follow them. Rarely as a treaty move alone: both treaties carry the same PPT, and a migration made to gain treaty access is itself testable.

Part 12 of the Variable Capital Companies Act 2018 lets a “foreign corporate entity” (a body corporate incorporated outside Singapore comprising one or more collective investment schemes) apply to be registered as a VCC. The section 134 application includes its home constitution, the proposed constitution and the manager’s and directors’ names. Section 136 requires refusal if the manager does not satisfy section 46(2) or no director is a director or qualified representative of the manager. Within 60 days of the notice of transfer, the entity must evidence de-registration at home (section 135(6)). Under section 137 its schemes become sub-funds of an umbrella VCC and registration does not “create a new legal entity”. Mauritian law must also permit the exit; we have not verified it, so take Mauritian advice.

The open question is Indian: we found no official statement on how India treats a pre-2017 holding acquired by a Mauritius entity that is now Singapore resident, or whether Article 24A then applies. Obtain a ruling-level Indian view before migrating a vehicle with material grandfathered positions. Filing pitfalls are covered in Part 12 inward redomiciliation mistakes, and the regime comparison in Choose a Mauritius VCC or Singapore VCC. Indian families weighing a domestic hub should also read GIFT City vs Singapore.

What should Mauritius-based India investors do now?

Inventory each holding and the treaty benefit it relies on, then test that benefit against Article 27B on post-10 August 2026 facts.

1. Separate pre-1 April 2017 shares, post-2017 shares and dividend or interest streams relying on the 5%, 15% or 7.5% caps.
2. For everything except pre-2017 shares, record the principal purposes of the Mauritius holding: who decides, where, and what the entity does.
3. Confirm Indian withholding agents’ post-Protocol documentation requirements.
4. Watch the Mauritius Gazette and MRA treaty page for the regulation 6 commencement notice.
5. If management is already in Singapore, model the India-Singapore position, including the Article 24A cost and different rate caps, before deciding to migrate.

Company secretarial support for a Singapore VCC or holding company is available from Singapore Secretary Services.

Frequently asked questions

When did the India-Mauritius Protocol enter into force?

India’s Notification S.O. 5611(E) of 13 October 2026 states 10 August 2026. The Mauritian ministerial commencement notice had not been published on mra.mu as at 18 October 2026.

Does the new PPT apply to shares bought before April 2017?

CBDT Circular No. 01/2025 says the grandfathering provisions stay outside the PPT. It predates the Protocol, so confirm it is still applied in your case.

Is Singapore now a better treaty route into India than Mauritius?

Not on post-2017 capital gains, where both treaties allow Indian tax and carry the same PPT. Mauritius has lower dividend and interest caps; Singapore’s case rests on real management there.

Does a re-domiciled VCC keep its acquisition dates for Indian purposes?

Singapore law says no new legal entity is created (section 137(2)). India’s treatment has not been addressed in any official source we found.

Can a VCC sub-fund get its own certificate of residence?

Residence is determined at the umbrella level; the VCC applies and the certificate shows both VCC and sub-fund.

Sources

• Mauritius Revenue Authority: Double Taxation Avoidance Agreements
• Government Notice No. 136 of 2026 (Mauritius)
• IRAS: Singapore-India DTA with MLI effects and Third Protocol
• IRAS: Applying for a Certificate of Residence
• Variable Capital Companies Act 2018

Also relied on (incometaxindia.gov.in blocks automated link checks): India Notification No. 135/2026 (S.O. 5611(E)), 13 October 2026; CBDT Circular No. 01/2025, 21 January 2025.

Raffles Corporate Services helps family offices and fund managers with VCC incorporation and re-domiciliation, Singapore substance for India-facing funds, and ongoing compliance. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 18 October 2026. The Editorial Team, Variable Capital Companies Act.