On November 18, the Republic of Cyprus and the Republic of India have concluded a new DTA, which will replace the previous DTA signed on June 13, 1994. The DTA is expected to come into effect in India, in respect of income derived in fiscal years beginning on or after April 1, 2017.
The Minister of Finance in Cyprus, Mr. Harris Georgiades, signed the Treaty with India’s High Commissioner in Cyprus Mr. Ravi Bangar. In their statement they informed that the agreement will contribute to further develop the trade and economic links between Cyprus and India. The agreement will remove Cyprus from the Indian government’s blacklist.
“The text agreed between the two countries’ negotiating teams settles issues that were pending for years, provides stability and assurance to investors, and contributes to further developing commercial and financial ties between the Republic of Cyprus and the Indian government as well as other countries,” the finance ministry of Cyprus said.
The DTA provides for source-based taxation of capital gains arising from alienation of shares, implying that capital gains made on investment in shares of Indian companies will be taxed in India. The agreement also expands the scope of ‘permanent establishment’ and reduces tax rate on royalty from 15 to 10 percent to align with India's domestic tax rate. The actual DTA is not yet available.
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