The tax treaty between Cyprus and India has not been terminated and Cyprus is committed to finalize the "long pending review" of the tax treaty between the two countries, the finance ministry of the Mediterranean island nation announced.

Cyprus made the clarification, apparently, to dispel investor fears after the Indian government notified Cyprus as a 'notified jurisdictional area' (NJA) on 1st of November this year. India owns the right to do so under section 94A of its Income Tax Act.

The Indian government's notification means that any investment that would route through Cyprus would require higher disclosures, applicability of transfer pricing provisions plus higher withholding of tax in India.

The Congress-led UPA government issued the NJA notification after Cypriot declined to provide information requested by the Indian tax authorities under the exchange of information article of the India-Cyprus tax agreement.

Cyprus is the first nation that has been notified as an NJA by India.

Under the Indian tax laws, the withholding tax on interest is 20 per cent; but under the India-Cyprus tax treaty, it is just 10 per cent, which makes Cyprus a striking jurisdiction for structuring debt investments in India.

Cyprus currently stands at seventh rank on the list of countries investing in India. Between April 2000 and August 2013, around Rs 33,836 crore were invested in India via Cyprus.