New Delhi: After Mauritius, India and Cyprus have agreed to revise their tax treaty under which capital gains tax will be levied on sale of shares on investments made after April 1, 2017. After the treaty with Mauritius to tax capital gains from next year, there was fear that investors could start investing from Cyprus defeating the purpose of treaty with Mauritius.
As per an agreement reached between India and Cyprus on June 29, investments made prior to April 1, 2017, will continue to enjoy the old benefits. “The provisional agreement would be placed before the Cabinet for approval, subsequent to which the new tax treaty can be signed by the two countries,” said finance ministry. The new Cyprus Double Taxation Avoidance Agreement would provide for source-based taxation of capital gains. The completion of the negotiation will also pave the way for the removal of Cyprus from the list of ‘Notified Jurisdictional Areas’ retrospectively from November 2013.