Evolution and Anti-Abuse Reform of Tax Treaties

Bilateral tax treaties, such as the historic India-Mauritius Double Taxation Avoidance Agreement of 1982, were originally structured to promote international capital inflows and avoid double taxation. However, over time, beneficial treaty provisions combined with low-tax domestic regimes led to unintended tax avoidance, treaty shopping, and double non-taxation through conduit entities. To protect the integrity of the international tax framework, Contracting States periodically reform these conventions, as seen in the 2016 Protocol which shifted capital gains taxation rights from a residence-based model to a source-based system. Such reforms ensure that international commerce flourishes without compromising the legitimate revenue rights of the source jurisdiction.(The authority for advance rulings Vs Tiger Global International II holdings) | 2026 INSC 60)