| A revised Agreement between
India and Cyprus for the Avoidance of Double Taxation and the Prevention of
Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol,
was signed on 18th November, 2016 in Nicosia, which will replace the existing
DTAA that was signed by two countries on 13th June 1994. The Protocol was signed
by Mr. Ravi Bangar, High Commissioner of India to Cyprus on behalf of India and
Mr. Harris Georgiades, the Minister of Finance on behalf of Cyprus.
Both
sides have now exchanged notifications intimating the completion of their
respective internal procedures for the entry into force of the DTAA, with which
the revised DTAA shall come into effect in India in the fiscal years beginning
on or after 1st April, 2017. The revised DTAA will enable source based taxation
of capital gains on shares, except in respect of investments made prior to 1st
April, 2017. In addition, the DTAA will also bring into effect updated
provisions as per international standards and in accordance with the consistent
position of India.
In a
separate development, the notification of Cyprus under section 94A of the Income
Tax Act, 1961, as a notified jurisdictional area for lack of effective exchange
of information, has been rescinded with effect from 1.11.2013 [Notification No. 114/2016 dated 14.12.2016]. The bilateral
economic ties between the two countries are expected to be further strengthened
by these measures.
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