CLARIFICATIONS ON DELCARATION OF CYPRUS AS A NOTIFED JURISDICTIONAL AREA - SPECIAL MEASURES IN RESPECT OF TRANSACTIONS WITH PERSONS LOCATED IN NOTIFIED JURISDICTIONAL AREA UNDER SECTION 94A OF THE INCOME TAX ACT, 1961.

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..... nsactions with persons located in notified jurisdictional area as an anti-avoidance measure. As per section 94A , the Central Government may, having regard to the lack of effective exchange of information with any country or territory outside India, specify the said country or territory as a notified jurisdictional area in relation to transactions entered into by any assesse. The rules under sec .....

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..... decided to notify Cyprus as a notified jurisdictional area under section 94A of the Income-tax Act, 1961 through Notification No. 86/2013 dated 1st November, 2013 published in Official Gazette through SO 4625 GI/13. The implications of such a Notification are summarized as under: If an assessee enters into a transaction with a person in Cyprus, then all the parties to the transaction .....

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..... m a person located in Cyprus, then the onus is on the assessee to satisfactorily explain the source of such money in the hands of such person or in the hands of the beneficial owner, and in case of his failure to do so, the amount shall be deemed to be the income of the assessee [ Section 94A(4) ]. Any payment made to a person located in Cyprus shall be liable for withholding tax at 30 per cent .....

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