NOTIFICATION
SECTION 90 OF THE INCOME-TAX ACT
Section 90 of the Income-tax Act, 1961 – Double taxation agreement – Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries – Amendments in Agreement with Singapore
Notification No. 185/2005 [F.NO. 500/139/2002-FTD], Dated 18-7-2005
Whereas the annexed Protocol amending the Agreement between the Government of the Republic of India and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income shall enter into force on 1st August, 2005 under Article 7 of the Protocol amending the Agreement for giving effect to the provisions of the said Protocol;
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Protocol amending the Agreement between the Government of the Republic of India and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income shall be given effect to in the Union of India with effect from the 1st day of August, 2005.
PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE AND THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED IN INDIA ON 24TH JANUARY, 1994
The Government of the Republic of Singapore and the Government of the Republic of India, desiring to conclude a Protocol to amend the Agreement between the Government of the Republic of Singapore and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed in India on 24th January, 1994 (hereinafter referred to as “the Agreement”), Have agreed as follows:
ARTICLE 1
Paragraphs 4, 5 and 6 of Article 13 (Capital Gains) of the Agreement shall be deleted and replaced by the following:
“4. Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 of this Article shall be taxable only in that State.”
ARTICLE 2
With regard to the Article on “Exchange of Information” (Article 28), on a request made by a Contracting State, the Revenue Authority of the other Contracting State shall collect, and share with the first mentioned Contracting State, through its Competent Authority, whatever information that it is competent to obtain for its own purposes under its law.
ARTICLE 3
1. A resident of a Contracting State shall not be entitled to the benefits of Article 1 of this Protocol if its affairs were arranged with the primary purpose to take advantage of the benefits in Article 1 of this Protocol.
2. A shell/conduit company that claims it is a resident of a Contracting State shall not be entitled to the benefits of Article 1 of this Protocol. A shell/conduit company is any legal entity falling within the definition of resident with negligible or nilbusiness operations or with no real and continuous business activities carried out in that Contracting State.
3. A resident of a Contracting State is deemed to be a shell/conduit company if its total annual expenditure on operations in that Contracting State is less than S$200,000 or Indian Rs. 50,00,000 in the respective Contracting State as the case may be, in the immediately preceding period of 24 months from the date the gains arise.
4. A resident of a Contracting State is deemed not to be a shell/conduit company if—
(a) it is listed on a recognised stock exchange 2 of the Contracting State; or
(b) its total annual expenditure on operations in that Contracting State is equal to or more than S$200,000 or Indian Rs. 50,00,000 in the respective Contracting State as the case may be, in the immediately preceding period of 24 months from the date the gains arise.
Explanation.—The cases of legal entities not having bona fide business activities shall be covered by Article 3.1 of this Protocol.
ARTICLE 4
Paragraph 2 of Article 12 (Royalties and Fees for Technical Services) of the Agreement shall be deleted and replaced by the following paragraph:
“2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10 per cent.”
ARTICLE 5
It is agreed that there shall be an inter-governmental group consisting of representatives of the revenue authorities of the two Contracting States which shall review the working of the provisions of this Protocol at least once a year or earlier at the request of either Contracting State and may make recommendations for improvements including improvements to the provisions of this Protocol.
ARTICLE 6
Articles 1, 2, 3 and 5 of this Protocol shall remain in force so long as any Convention or Agreement for the Avoidance of Double Taxation between the Government of the Republic of India and the Government of Mauritius provides that any gains from the alienation of shares in any company which is a resident of a Contracting State shall be taxable only in the Contracting State in which the alienator is a resident.
ARTICLE 7
This Protocol, which shall form an integral part of the Agreement, shall come into force on 1st August, 2005.
In witness whereof, the undersigned, being duly authorized by their respective Governments, have signed this Protocol.
Done at New Delhi, India, this twenty-ninth day of June, 2005, in two originals in English language, each text being equally authentic.
| For the Government of the | For the Government of the |
| Republic of India : | Republic of Singapore: |
| signed | Signed |
| (Kamal Nath) | (Lim HNG Kiang) |
| Minister for Commerce and Industry | Minister for Trade and Industry |
