Cabinet likely to approve new India-Cyprus DTAA

The Cabinet is likely to approve tomorrow the revised India Cyprus Double Taxation Avoidance Agreement (DTAA) which provide for source based taxation of capital gains on transfer of shares.

Sources said the Cabinet chaired by Prime Minister Narendra Modi would take up the agreement between the two countries regarding avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income.

The Cabinet meeting is scheduled tomorrow morning, a government spokesperson said in a Tweet.

An official level meeting between India and Cyprus was held here in June to finalise the new India Cyprus DTAA, wherein all pending issues, including taxation of capital gains, were discussed, and in-principle agreement was reached on all pending issues.

"It was agreed to provide for source based taxation of capital gains on transfer of shares. However, a grandfathering clause would be provided for investments made prior to April 1, 2017, in respect of which capital gains would be taxed in the country of which taxpayer is a resident," the Finance Ministry had said in a statement.

India and Cyprus have a DTAA since 1994.

Cyprus is a major source of foreign fund flows into the country. From April 2000 till March 2016, India received Foreign Direct Investment worth Rs 42,680.76 crore from Cyprus.

The completion of the negotiation on avoidance of double taxation and the prevention of fiscal evasion has also paved the way for the removal of Cyprus from the list of 'Notified Jurisdictional Areas' retrospectively from November 2013. PTI LUX NKD .