Union Cabinet on 24 August 2016 approved the signing of an agreement and the protocol between the India and Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.
•    The approval will help India in its fight against tax evasion, round tripping and base erosion/profit shifting.
•    The approval will replace the existing Double Taxation Avoidance Agreement (DTAA) that was signed between the two nations on 13 June 1994. 
•    It will align the applicable provisions with the consistent policy followed by India and the revised international standards.
•    It will also prevent the abuse of beneficial provisions of the DTAA that can distort financial and real investment flows and create challenges in respect of tax collection.
•    It provides for source based taxation of capital gains on transfer of shares, instead of residence based taxation as provided in the existing DTAA.
•    The proposed DTAA also enables source based taxation of capital gains from transfer of shares of any company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State.
•    It includes a provision for Assistance in Collection of Taxes.
•    It also provides for a revised provision for Exchange of Information that would enable the use of information exchanged for other purposes, with the permission of the Competent Authority of the country providing the information.
•    It expands the scope of the Permanent Establishments (PE) that enables source based taxation of business income.