Mauritius has strengthened its laws to combat the menace of money laundering and tax evasion, Rama Sithanen, former Finance Minister of the island nation, has said.

"Mauritius has always collaborated with India to fight round-tripping, to combat money laundering and tax evasion. Our laws have been strengthened to prevent round-tripping and the penalty is the revocation of the licence," he said in an interview.

His comments come at a time when India and Mauritius are gearing up to revise the Double Tax Avoidance Agreement (DTAA), which was originally signed in 1983. The officials from the two countries are likely to meet in December to finalise changes in the tax treaty.

The revised treaty, according to sources, will be addressing the controversial clauses relating to capital gains tax on sale of securities.

While short-term capital gains are taxed at 10 percent in India, they are exempted in Mauritius. Several companies take advantage of the DTAA and escape paying taxes in both the countries.