India and Cyprus have agreed to revise their tax treaty under which capital gains tax will be levied on the sale of shares of investments made after April 1, 2017. The decision has been taken after an official level meeting between India and Cyprus took place in New Delhi to finalize the new India-Cyprus Double Taxation Avoidance Agreement, wherein all pending issues, including taxation of capital gains, were discussed, and in principle, the agreement was reached on all pending issues.
The new Cyprus Double Taxation Avoidance Agreement (DTAA), which has been agreed upon by both the countries, would provide for source-based taxation of capital gains on transfer of shares. However, 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. Apart from it, both sides also discussed the issue of notification of Cyprus under section 94A of Income-tax Act, 1961. As the completion of the negotiation on avoidance of double taxation and the prevention of fiscal evasion will also pave the way for the removal of Cyprus from the list of ‘Notified Jurisdictional Areas’ retrospectively from November 2013.
So let’s discuss some questions related to this post :
1. Name the country with which India has agreed to revise their tax treaty?
2. As per the new tax treaty between India and Cyprus, the capital gain tax will be levied on the sale of shares of investments applicable after which date?
Courtesy: Economic Times