The Indian government, in a press note dated 18 November 2016, announced that India and Cyprus had signed a revised agreement for the avoidance of double taxation and fiscal evasion. While the text of the revised treaty has recently been published in the Cyprus Gazette, the Indian government did not immediately make the text of the revised treaty public. The new treaty will enter into force after the necessary internal procedures are completed in both countries and is expected to come into effect in India in respect of income derived in fiscal years beginning on or after 1 April 2017.
As per the revised agreement, India will have the right to tax capital gains arising from the transfer of investments made on or after 1 April 2017.
Investments made before 1 April 2017 have been grandfathered and will continue to enjoy the benefits of the existing agreement. Gains arising from the transfer of such investments will not be subject to capital gains tax in India on the basis of the revised agreement.
The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.