GoI has, by way of a press release dated August 24, 2016, announced that the Union Cabinet, chaired by the Prime Minster, has given its approval for signing the ‘Protocol between India and Cyprus for avoidance of double taxation and the Prevention of Fiscal Evasion’ amending the Indo – Cyprus Double Taxation Avoidance Agreement. As per the press release, India will get the right to tax capital gains arising in India, however, investments made prior to April 1, 2017 will be grandfathered, in respect of which, capital gains would be taxed in the country of where the taxpayer is a resident. It further provides that India will consider rescinding the notification dated November 1, 2013[1] declaring Cyprus as a notified jurisdictional area under Section 94A of the Income-tax Act, 1961, with retrospective effect. This follows the recent amendment of the India – Mauritius Double Taxation Avoidance Agreement which withdraws the capital gains tax exemption. Talks to amend the India – Singapore Double Taxation Avoidance Agreement are also in progress.

[1]     Notification No.86/2013 [F.NO.504/05/2003-FTD-I]/SO 4625] dated November 1, 2013.