Mauritius route is a channel to evade paying taxes in India amounting to thousands of crores of rupees with the help of loopholes in a bilateral agreement on double taxation.

Double Taxation Avoidance Convention

The key to the apparent paradox lies in the provisions of a two-decade-old bilateral agreement, the Double Taxation Avoidance Convention (DTAC). Foreign entities have set up paper companies in Mauritius, claiming to be Mauritian residents. These companies, masquerading as Mauritian companies, have invested in India and taking advantage of the DTAC they save paying taxes in India.