Home » Alerts » ITAT Rules Capital Gains on Equity-Oriented Mutual Funds Not Taxable Under India-Mauritius DTAA

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In a crucial ruling, the Delhi Bench of the ITAT held that capital gains arising from the sale of equity-oriented mutual funds by a Mauritius-based FII are not taxable in India under Article 13(3A) of the India-Mauritius DTAA. The Tribunal observed that such gains cannot be equated with gains from the alienation of “shares” as mutual fund units are a distinct class of securities under Indian law and thus, not covered under the said Article. The ruling reinforces the principle of strict interpretation of DTAA provisions.

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