When asked to comment on demonetisation, wherein Rs 500 and Rs 1,000 currency notes have been made illegal tender, Jugnauth said, “Modi has done the right thing. People will have some problem due to it. But, people must realise that Modi has saved India’s economy.”
Earlier in 2016, India also signed a protocol to amend the double taxation avoidance agreement (DTAA) with Mauritius. The DTAA was more than three decades old and its idea was to ensure that two countries don’t tax the same income.
However, people started using this to avoid taxes. They would create a company in Mauritius, which would exist only on paper and use it to route money to India. The income thus earned was tax-free in India, while it was taxed at only marginal rate in Mauritius.
This resulted in a lot of money on which tax wasn’t paid, meaning black money. To curb this practice, India signed a protocol, as per which India has a right to tax capital gains on sale or transfer of shares of an Indian company by a Mauritian tax resident.
