The amended Double Tax treaty between Cyprus and India is coming into effect on 1 April 2017.
The amended treaty allows for a source based taxation of gains derived from the alienation of shares. As a result, gains derived by a Cyprus tax resident company from the disposal of shares held in an Indian tax resident company may be taxed in India.
The amended treaty includes grandfathering provisions based on which gains from the alienation of shares will be taxable only in the State where alienator is a tax resident, provided that the investment in such shares was concluded prior to 1st April 2017. In this respect, any gains derived by a Cyprus tax resident company, at any future date, from the disposal of shares held in an Indian tax resident company, will continue to be taxable only in Cyprus, provided that such shares were acquired prior to 1st April 2017.
Cyprus retrospectively removed from the Indian list of "Notified Jurisdictions"
Based on an announcement of the Indian Ministry of Finance dated 16th December 2016, Cyprus has been retrospectively removed from the list of" Notified Jurisdictions" with effect as from 1st November 2013.
The following withholding tax rates will continue to apply