"Unless we revise the treaty (with Mauritius), I don't think we should do anything unilaterally. Therefore, this clause was not intended to revise the treaty unilaterally, that is an ongoing discussion and that discussion will lead us to somewhere crucial," he said in TV interviews.
The Minister, however, expressed concerns over misuse of tax treaty by investors who route their investments through Mauritius to take advantage of the treaty.
"...If the advantage (of treaty) is enjoyed by genuine Mauritius residents, businessman, we have no complaint. But there are reports that the treaty clauses are taken advantage of by some (outside) people. Some would call it misuse... Which is why we commenced negotiation of treaty," he said.
The Finance Bill proposed amending Sections 90 and 90A in order to provide that submission of a tax residency certificate is a necessary but not a sufficient condition for claiming benefits under the agreements.
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Earlier in the day, the Finance Ministry said: "Since a concern has been expressed about the language of sub-section (5) of Section 90 (of I-T Act), this concern will be addressed suitably when the Finance Bill is taken up for consideration."
On the adverse reaction of stock market to the Budget proposal, Chidambaram said, "Markets were jittery yesterday ...I can understand why, they must have misunderstood."
Concerns were being expressed that the provision in the proposal would make it difficult for investors routing their funds from low-tax countries like Mauritius, Cyprus and Singapore to avail the benefits of tax treaties.