On 18 November 2016, a revised agreement between India and Cyprus to avoid double taxation and prevent income tax evasion (DBA) was signed in Nicosia, along with its protocol, which will replace the existing DBAA, signed by two countries on 13 June 1994. The minutes were signed by Mr Ravi Bangar, High Commissioner of India in Cyprus, on behalf of India and Mr Harris Georgiades, Minister of Finance on behalf of Cyprus. The Government of the Republic of India and the Government of the Republic of Cyprus are working to reach an agreement to avoid double taxation and to prevent tax evasion on income and capital taxes; The new agreement provides for tax assistance between the two countries. In addition, the information exchange provisions are updated to recognized international standards, the volume of the institution is expanded and the royalty tax rate is reduced to the level of Indian tax legislation. In addition, the text of other provisions will be updated in accordance with international standards and Indian tax treaties. The modernization and development of the network of double taxation conventions is of great economic and political importance and aims to further strengthen and attract foreign investment to Cyprus. This is an important development that will contribute to the development of trade and economic relations between India and Cyprus. Indian tax authorities have been examining and challenging tax planning strategies and structures for some time that relocate profits to places where taxation is low or non-existent. The business services sector continues to play an important role in the Cypriot economy and the Cypriot government is committed to addressing issues of transparency and information exchange in order to strengthen relations between investors and their contractual partners. Cyprus has signed and is implementing the provisions of the OECD initiative on basic erosion and profit-sharing. 10. The qualified agent referred to the provisions of the convention on the prevention of double taxation.
He argued that the agreement on the prevention of double taxation between India and Cyprus had been amended. He submitted that the former DBAA, which was in effect at the time of the transaction, did not provide for the compensation of capital gains from the sale of shares of a company whose underlying assets were real estate. He referred to the subsequent agreement and argued that the above provision had been included in Article 13 of the DBAA. He referred to both agreements. Therefore, there is no tax revenue from the Cypriot company in India and, with respect to the sale of the cypriot company`s shares in the notator, the capital gain is taxable in the foreign resident`s country, i.e. Cyprus.