India is likely to revise the terms of the double taxation avoidance agreement (DTAA) with Cyprus, and reintroduce a 10% withholding tax rate.
The move comes after Delhi classified Cyprus as a notified jurisdiction earlier in November and withdrew DTAA benefits over the concerns of lack of information sharing on tax evaders.
In addition, the country mandated a 30% withholding tax on all payments made to Cyprus, and ruled that Indian firms to reveal the source of funds received from the jurisdiction.
India Breifing has quoted an Indian government source as saying that Cyprus has been requesting to be put off the notified jurisdictional area list on the grounds that it has started sharing information with India now.
"Though the information on specific requests by Indian tax authorities has started flowing in, a decision on taking it off the list would happen only when there is a specific commitment from them," the source added.
The newly formed Indian government has set up a enquiry committee Special Investigative team (SIT) to whip undeclared income in tax havens termed ‘black money’.
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Cyprus high commissioner Maria Michail said, "We don’t want black money in Cyprus, we want legitimate money. We are willing to work with the SIT on black money and will take up the issue with the new government."