Skip to main content

India Signs New Tax Treaty with Cyprus

By
WIDENING TAX NET Capital gains made on investment in Indian shares beginning April 1, 2017 to be taxed here
India and Cyprus have signed the revised tax treaty along with the protocol, plugging a gap that allowed investments routed through the country to escape tax in India.
The protocol signed on Friday is expected to come into effect in India, in respect of income derived in fiscal years beginning on or after April 1, 2017.

The amended tax treaty 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. It provides for grandfathering of investments made prior to April 1, 2017, which would continue to be taxed in the country of residence. India has similarly updated its tax treaty with Mauritius, which has a 32.8% share in FDI into India since April 2000. Cyprus has a 2.88% share over this period.

“The signing of the revised of the revised India Cyprus tax treaty is a welcome step.While it aligns yet another tax treaty to India's stand on moving towards a source based system of taxation (taxing dian shares, in capital gains on Indian shares, in India), it provides certainty to investors on the grandfathering of existing investments,“ said Gautam Mehra, Leader Tax and Regulatory, PwC. Amended tax treaty also expands the scope of `permanent establishment' and reduces tax rate on royalty from 15% to 10% to align with India's domestic tax rate.

The treaty also provides for assistance in collection of taxes and provides for effective exchange of information on tax matters, including bank information, according to an official statement.India had declared Cyprus a noncooperative jurisdiction when it showed reluctance to revise the tax treaty.

This has resulted in an automatic mandatory levy of a 30% withholding tax, and applicability of Indian transfer pricing provisions to transactions with Cypriot entities.

19TH NOVEMBER, 2016, The Economic Times, NEW DELHI

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more