AFTER Mauritius, it was Cyprus
at the centrestage for the Indian Revenue diplomats. And after two days of
talks in the National Capital, it has been officially announced that both
the countries have reached an agreement on all the pending issues, including
the capital gains. Cyprus has agreed
to source based taxation of capital gains on transfer of shares.
However, a
grandfathering clause would be provided for investments made prior to 1.4.2017,
in respect of which capital gains would be taxed in the country of which
taxpayer is a resident. These provisional agreements will now be placed
before the Cabinet for its approval, subsequent to which the new tax treaty
can be signed by the two countries.
Both sides also discussed the issue of notification of Cyprus under section
94A of Income-tax Act, 1961. It was agreed that India will consider rescinding
the said notification with effect from 1st November, 2013, and will be initiating
the process for the same. Both sides expressed satisfaction with the progress
achieved in the meeting, and hoped that it would lead to resolution of all
pending matters at the earliest.
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