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There is no reliable published figure in the sources reviewed for how much black money the 2016 India–Mauritius tax deal recovered or how much extra tax it raised. Its significance is in the rules: it shifted qualifying gains on shares acquired from 1 April 2017 toward taxation in India, while preserving earlier investments and temporarily limiting the tax rate for some later gains. The chart below shows what changed—and separates the government’s stated anti-abuse aims from outcomes that have not been quantified.
What the “size” of the deal does—and does not—mean
The 2016 protocol was an amendment to the India–Mauritius tax convention, not a published estimate of black money recovered. The Government of India said it was intended to tackle treaty abuse and round-tripping, curb revenue loss, prevent double non-taxation, and improve information exchange. Those statements describe policy goals; they are not an impact assessment.
In this context, “round-tripping” means funds originating in India are routed through Mauritius and return appearing to be foreign investment. The treaty changes addressed the tax rules and information-sharing framework that authorities associated with this risk. The available official material does not establish a monetary total for illicit funds stopped, tax revenue gained, or black money recovered because of the protocol.
How the capital-gains rules changed
The central change concerned gains when shares in a company resident in India are sold. The decisive date is when the shares were acquired, not when the protocol was signed.
| Shares acquired | Indian capital-gains treatment under the 2016 change | Rate treatment |
|---|---|---|
| Before 1 April 2017 | Grandfathered: the protocol’s new Indian capital-gains rule did not apply to these investments. | Not brought under the new rule by this change. |
| On or after 1 April 2017 | Gains from alienation of shares in Indian-resident companies became taxable in India. The Finance Ministry said the change applied from financial year 2017–18. | For qualifying gains during 1 April 2017–31 March 2019, the rate was limited to 50% of India’s domestic tax rate, subject to Limitation of Benefits conditions. The government said full domestic rates would apply from financial year 2019–20. |
The transitional concession was conditional, not automatic. It depended on a main-purpose test and a bona fide business test. The protocol also set an operations-expenditure threshold used to deem a resident company a shell or conduit for purposes of the transition-period benefit. That was a historic treaty condition, not a general safe harbor for current investments.
Other parts of the protocol
- Interest: Specified interest income received by Mauritian-resident banks on debt claims or loans made after 31 March 2017 was subject to a 7.5% withholding rate under the protocol.
- Information exchange: The protocol updated exchange-of-information provisions to international standards and provided for assistance in tax collection.
- Other income: It also changed the treatment of other income.
The Mauritius Revenue Authority’s treaty summary lists India and source-state maximum rates for dividends, interest, and royalties, but it does not explain the capital-gains rule. It should not be used on its own to infer the share-sale treatment described above.
Why authorities connected the treaty to black money
Indian authorities had associated the treaty with treaty abuse and round-tripping concerns. In its 29 August 2016 release, the Ministry of Finance said the protocol would “tackle treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between the two Contracting Parties.” This is the government’s stated rationale, not proof of a quantified result.
The protocol’s information-exchange provisions also belong in a wider context. India’s anti-black-money efforts included information exchange and automatic exchange of financial-account information. A 2017 government report described automatic exchange of information (AEOI) as systematic, periodic transmission of bulk taxpayer information and noted that India joined the CRS-related Multilateral Competent Authority Agreement in 2015. That broader framework should not be confused with the protocol’s specific change to capital-gains taxation.
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India and Mauritius signed the protocol on 10 May 2016. It entered into force in India on 19 July 2016 and was notified in India’s Official Gazette on 11 August 2016.
A 2024 India–Mauritius Joint Vision said the leaders agreed to ratify a protocol amending the Double Taxation Avoidance Agreement after ongoing discussions concluded. The joint statement alone does not establish whether that later protocol was subsequently ratified or entered into force. Therefore, the 2016 rules explained here should not be presented as a complete account of the treaty’s status in 2026 without checking a current official notification or treaty text.
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