The Cyprus Ministry of Finance has formally announced that the negotiations on the double taxation agreement between Cyprus and India were successfully completed on June 29. When the amended agreement enters into force the Indian authorities will rescind the classification of Cyprus as a Notified Jurisdictional Area under section 94A of the Indian Income-tax Act 1961 with retrospective effect from 1 November 2013.
As was expected, the agreement reached provides for source based taxation for gains from the alienation of shares. However, investments undertaken prior to 1 April 2017 are "grandfathered", with taxation rights over gains on disposal of such shares at any future date remaining with the state of residence of the seller.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
