New Delhi, Oct. 14 -- Foreign investors routing money into India through Mauritius will face greater scrutiny under new tax treaty rules that allow India to deny tax benefits if one of the main reasons for an investment structure was to obtain those benefits.

A notification issued on 13 October gives effect in India to a protocol amending the India-Mauritius tax treaty, signed in March 2024. The protocol came into force on 10 August 2026, while the notification formally implements its provisions in India.

The amendment introduces a Principal Purpose Test (PPT), which allows tax authorities to deny treaty benefits if obtaining them was one of the main purposes of a transaction or arrangement. Benefits can still be granted if doing so is ...