31 October, 2016
Revision of Indo-Cyprus Double Taxation Avoidance Agreement
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 grand- fathered, in respect of which, capital gains would be taxed in the country of which the taxpayer is a resident. It further provides that India will consider rescinding the notification dated November 1, 20132 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.
Constitution (One Hundred and First Amendment) Act, 2016 for Introduction of Goods and Services Tax
The Bill for introduction of Goods and Services Tax (‘GST’) received the Presidential assent on September 8, 2016 and was notified3 as Constitution (One Hundred and First Amendment) Act, 2016 on September 16, 2016, which provides concurrent powers to the Central and State legislatures to make laws on GST. As a step towards implementation of GST, the Union Cabinet in its meeting held on September 12, 2016 approved setting-up of GST council (‘Council’), consisting of the Union Finance Minister, Union Minister of State for Revenue or Finance, and State Finance Ministers or any other minster nominated by any State Government. The Council will make recommendations on important aspects relating to GST e.g., exemptions, place of supply, threshold limits and GST rates.
2 Notification No.86/2013 [F.NO.504/05/2003-FTD-I]/SO 4625] dated November 1, 2013.
3 F. No. 31011/07/2014-SO (ST) dated September 16, 2016.
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
