India will look at removing Cyprus from the blacklist of countries that do not share details about tax evaders after examining information given the island nation.

India had blacklisted Cyprus last year for not sharing information about tax evaders.

“They (Cyprus) have given some information. We are just examining whether information given by them is substantive ...if we are satisfied that the information provided is substantive, then matter (of removing Cyprus from Indian government’s blacklist) will be looked at,” the top official said today.

The Finance Ministry had classified the island nation as a notified jurisdictional area on grounds that Cyprus was not providing information requested by tax authorities under the taxation treaty.

Following the notification, all payments made to Cyprus attracted a 30 per cent withholding tax and Indian entities receiving money from there were required to disclose the source of funds.

The notification also meant that “no deduction in respect of any other expenditure or allowance arising from the transaction with a person located in Cyprus shall be allowed unless the assessee maintains and furnishes the prescribed information“.

It had also added that if “any sum is received from 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“.

India and Cyprus had entered into an agreement for avoidance of double taxation of income and prevention of fiscal evasion in December 1994.

Under the agreement, both countries have a legal obligation to exchange such information.

In Budget of 2011—12, the Finance Ministry had inserted a clause — Section 94A — in the Income Tax Act to notify and guard against countries that do not cooperate in the exchange of information protocol.

The Central Board of Direct Taxes (CBDT) in June last year had notified rules under which an entity based in a “notified jurisdictional area” will have to give an undertaking to share information in a prescribed format.

India, as part of its efforts to counter the menace of black money and evasion of taxes, undertakes legal agreements like Double Taxation Avoidance Agreement (DTAA) and Tax Information Exchange Agreement (TIEA) with other countries.