New Indo-Cyprus Double Taxation Avoidance Agreement

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Jan 01, 2017

New Indo-Cyprus Double Taxation Avoidance Agreement

GoI and the Government of Cyprus have signed the New India-Cyprus Double Taxation Avoidance Agreement on November 18, 2016, which, inter alia, provides for source based taxation of capital gains arising from alienation of shares of companies that are tax residents of India. However, a grandfathering clause has been provided for investments made prior to April 1, 2017, in respect of which capital gains would be taxed in the country of which the said taxpayer is a resident. Further, the notification[1] declaring Cyprus as a Notified Jurisdictional Area under section 94A of the Income-tax Act, 1961, has been rescinded with retrospective effect.[2]

[1] Notification No.86/2013 [F.NO.504/05/2003-FTD-I]/SO 3307 (E); dated November 01, 2013.

[2] Notification No.114/2016 [F.NO.500/02/2015-FT & TR- III]/SO 4033 (E)]; dated December 14, 2016 as amended by Notification No.119/2016 [F.NO.500/02/2015-FT & TR- III]/SO 4082 (E)]; dated December 16, 2016.

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