Double Tax Avoidance Treaty India-Singapore
The Double Taxation Avoidance Agreement is a tax accord between two countries to avoid taxing of same income by two countries levying their own tax. Double Taxation unjustly penalizes income flow between the countries and thereby discourages trade & commerce between the countries.
To mitigate the above problem and to reduce the overall burden of a taxpayer, Singapore & India signed the DTA. Pursuant to the signing of the agreement, any income taxable in both the countries will be taxable only in one country according to the terms of the DTA
Applicability: – Legal Entities & Individuals of the signing countries India & Singapore
| Country | Taxes Covered |
| India |
|
| Singapore |
|
Key Provisions of India & Singapore DTA
| Nature | Tax Treatment |
| Business Profit | Singapore based business has a permanent establishment in India, the profit attributable to the permanent establishment will be taxed only in India. |
| Interest | 10% of the Gross Amount, if interest is on Bank Loan
15% of the Gross Amount in all other cases |
| Dividend | Prior to April 1 2020, Companies in India paying dividend bears Dividend Distribution Tax of 15% plus Surcharge wherein recipient is exempt from any tax on dividend. However, from April 1, 2020, India has abolished DDT and the dividend will be taxed in recipient’s hand. Tax Rate is 10% for Indian Shareholders & 20% for Foreign Shareholders
In Singapore, dividends are tax free both by company & recipient shareholder India-Singapore DTA states below treatment of tax on dividend income: –
|
| Royalty | Tax rate for Royalty is 10% to 15% depending on the kind of royalty paid to non- residents |
| Capital Gain Tax on Sale of Shares |
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Author Bio
What if an Indian resident invest in a Singapore company. As per article 13 , it will be taxed in the Singapore @0 rate. Does it mean for Indian resident there is no capital gain tax in India for sale of shares of a Singapore company