FIVE MAURITIUS COMPANIES received notices from the Indian tax authorities in March asserting the companies do not qualify for benefits under the India-Mauritius tax treaty. The notices attempted to collect taxes back to 1996. However, India quickly withdrew them after the Bombay stock exchange index dropped 200 points when news of the notices broke on April 4.
Meanwhile, a public interest lawsuit has been filed in the Delhi high court claiming that the Indian government withdrew the notices under pressure from the finance minister, whose daughter-in-law manages India Fund Inc., a Mauritius-based fund that invests in Indian companies. The daughter-in law works for Oppenheimer Investment Advisers in New York.