Singapore-India DTAA
Tax Treaty Guide with Examples
This guide explains how the India–Singapore Double Taxation Avoidance Agreement (DTAA) can benefit you and your business. It outlines the key provisions of the treaty, including how it helps prevent double taxation and the applicable rules on withholding tax, capital gains, dividends, interest, royalties, and other types of income arising from cross-border transactions.
Considering setting up a company in Singapore as an Indian entrepreneur? In addition to the tax advantages outlined in this article, our Singapore company registration guide explains the full incorporation process.
This article covers the following topics of the Singapore-India DTAA:
Singapore-India DTAA: Purpose of the Agreement
The Double Taxation Avoidance Agreement (DTAA) between India and Singapore is a bilateral tax treaty designed to eliminate the double taxation of income earned between the two countries. Its primary objective is to reduce the overall tax burden on residents and promote cross-border trade and investment. Without such an agreement, the same income could be taxed in both jurisdictions—once in the source country and again in the resident country—leading to an unfair financial burden on taxpayers and discouraging economic activity between the two nations.
By leveraging the India–Singapore DTAA and Singapore’s tax regime, Indian entrepreneurs benefit from reduced tax exposure. The Singapore corporate tax rate is capped at 17%, with generous tax exemptions available to qualifying startups and SMEs. Likewise, the Singapore personal tax system is progressive and relatively low compared to many other jurisdictions, making it attractive for founders, employees, and investors alike.
Singapore-India DTAA: Amendments Timeline
1994 January 30
The Double Taxation Avoidance Agreement between Singapore and India comes into effect2005 June 29
Provisions are modified by a protocol to eliminate most taxes on capital gains2011 September 1
A second protocol to incorporate OECD’s standard for the exchange of information for tax purposes comes into force2016 December 30
A third protocol is signed to preserve the majority of tax exemptions on capital gains2020 February 1
India announces its withdrawal of the Dividend Distribution Tax2020 April 1
The OECD’s Multilateral Instruments come into force for India and SingaporeSingapore–India DTAA: Scope of the Agreement
The DTAA between Singapore and India applies to persons (legal entities and individuals) who are residents of one or both countries. It is designed to eliminate double taxation on income earned in one country by a resident of the other, and also to prevent tax evasion.
Taxes covered under the DTAA:
- In India: income tax, including surcharge and other applicable taxes.
- In Singapore: income tax imposed under the Income Tax Act.
Types of income covered under the DTAA include Business Profits, Dividends, Interest, Royalties, Capital Gains, Personal Services, Directors’ Fees, Income from Immovable, Property, Pensions and Annuities.
The scope of the treaty also defines the maximum tax rates that can be applied to cross-border payments such as dividends, interest, and royalties. These reduced rates are binding on both countries and help create certainty and tax efficiency for businesses and individuals operating across both jurisdictions.
The agreement further establishes rules for residency, permanent establishment, and allocation of taxing rights, ensuring that each country taxes income only to the extent permitted under the treaty.
Singapore-India DTAA: Understanding Key Terms
Person
A “person” means:
- An individual,
- A company,
- Any other entity treated as a taxable unit under the laws of either country.
This means that both a private individual and a private limited company would qualify as a "person" under the DTAA.
Tax Resident
A “tax resident” is defined as any person who, under the laws of either India or Singapore, is liable to tax by reason of domicile, residence, place of management, or similar criteria.
Example: A Singapore-incorporated company with tax obligations in Singapore is a “resident” of Singapore under the treaty.
Permanent Establishment (PE)
A “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. This includes a place of management, a branch, an office, a factory, a workshop, a mine, oil or gas well, or any other place of extraction of natural resources. However, some activities (like storage or display of goods) may not create a PE if they are preparatory or auxiliary in nature.
Example: If an Indian company has a branch office in Singapore carrying out core business activities, it may constitute a PE and be taxable in Singapore.
Business Profits
Business profits are taxable only in the country of residence unless the company has a permanent establishment in the other country. In such a case, only the profits attributable to the PE may be taxed in that other country.
Example: A Singapore company selling goods to India without a fixed business presence in India will only be taxed in Singapore.
Withholding Tax
Withholding tax is the amount of tax that a country requires a payer (such as a company or individual) to deduct from certain types of income paid to a non-resident — such as dividends, interest, royalties, or service fees — and remit directly to the tax authority.
For example, when an Indian company pays royalties to a Singapore company, Indian tax law may require the Indian company to withhold a portion of that payment as tax and send it to the Indian government.
Singapore-India DTAA: Tax on Business Profits
Business Profits Earned by a Singapore Company from India
If a Singapore-resident company provides services or sells products to customers in India without having a Permanent Establishment (PE) in India, its profits will be taxable only in Singapore.
However, if the Singapore company has a PE in India—such as a fixed place of business, branch, or dependent agent—then India can tax the portion of profits attributable to that PE.
Example:
- A Singapore-resident company operates in India through a fixed place of business — for example, a project office or branch.
- The India operation qualifies as a Permanent Establishment (PE) under Article 5 of the India–Singapore DTAA.
- The profits attributable to the PE in India for the financial year are INR 60,00,000.
- We assume India’s corporate tax rate is 30%, and Singapore’s rate is 17%.
Tax in India:
- Since the PE is in India, the profits attributable to it (INR 60,00,000) are taxable in India under Article 7 (Business Profits) of the DTAA.
- India will tax the PE’s profits at 30%, resulting in a tax of INR 18,00,000.
Tax in Singapore:
- The Singapore company will declare its global income, including the PE’s profits.
- However, under Article 23 (Elimination of Double Taxation) of the DTAA, Singapore will grant relief through one of the following:
- Exemption method: Exempt the India-taxed profits from further Singapore tax, or
- Credit method: Tax the profits in Singapore but allow a Foreign Tax Credit (FTC) for tax paid in India.
- In practice, Singapore generally uses the credit method for relief. If Singapore taxes the INR 60,00,000 at 17%, the theoretical tax would be INR 10,20,000. But since INR 18,00,000 was already paid in India, no additional Singapore tax is due.
Business Profits Earned by an Indian Company from Singapore
If an Indian-resident company carries out business in Singapore without a PE, its business profits are taxable only in India.
If the Indian company establishes a PE in Singapore — for example, by setting up a Singapore branch — then Singapore can tax the portion of the profits attributable to that PE.
Example:
India company has a PE in Singapore. The PE earns SGD 1,000,000 in net profit.
Tax in Singapore:
The profit is attributable to the PE, so under Article 7 of the DTAA, Singapore has the exclusive taxing right on this amount.
- Singapore corporate tax rate: 17%
- Tax payable in Singapore:
SGD 1,000,000 × 17% = SGD 170,000
Tax in India:
- Since the profit is attributable to the Singapore PE, India does not tax this income again. This is not a situation where foreign tax credit (FTC) applies. Instead, under Article 23, India exempts this income from Indian tax altogether to avoid double taxation.
- Key Point: No additional tax is paid in India, and no FTC mechanism is triggered, because the DTAA provides for an exemption method rather than a credit method in this context.
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India-Singapore DTAA: Tax on Capital Gains
Capital Gains from Sale of Indian Shares by a Singapore Resident
For shares acquired before 1 April 2017:
Capital gains are exempt from Indian tax, even if sold after that date.
For shares acquired on or after 1 April 2017:
- India has the right to tax the capital gains.
- However, capital gains tax relief may still be available under India’s domestic capital gains rules.
Example:
A Singapore holding company sells shares in an Indian tech company in 2025.
- If the shares were purchased in 2015: India cannot tax the gains.
- If the shares were purchased in 2018: India can tax the gains as per its domestic capital gains rules.
Capital Gains from Sale of Singapore Shares by an Indian Resident
Singapore does not impose capital gains tax on the sale of shares or most other capital assets. Therefore, even though the DTAA allows for taxation in the country where the company is resident, capital gains from the sale of Singapore company shares by an Indian tax resident will typically not be taxed in Singapore.
However, the Indian resident may be subject to capital gains tax in India, depending on Indian tax laws, including whether the gains are classified as short-term or long-term.
Example:
An Indian investor sells shares in a Singapore startup.
- Singapore will not tax the gain.
- India may tax the gain based on applicable Indian capital gains rules.
India’s Capital Gains Tax Rules for Shares under the DTAA
Under Indian tax law, capital gains on the sale of listed and unlisted shares are taxed based on how long the shares were held and whether Securities Transaction Tax (STT) was paid.
Listed Shares (on recognized Indian stock exchanges)
- Short-Term Capital Gains (STCG)
- Applies if shares are sold within 12 months of purchase.
- Tax rate: 15% (plus applicable surcharge and cess).
- STT must be paid on sale for this concessional rate to apply.
- Long-Term Capital Gains (LTCG)
- Applies if shares are sold after 12 months.
- Tax rate: 10% (plus surcharge and cess) on gains exceeding ₹1 lakh per year.
- No indexation benefit.
Unlisted Shares (e.g., private Indian companies)
- Short-Term (held < 24 months)
Taxed as per the individual’s normal slab rate. - Long-Term (held ≥ 24 months)
Tax rate: 20% (plus surcharge and cess), with indexation benefit.
Example:
If a Singapore company sells unlisted shares in an Indian company acquired after 1 April 2017, then:
- India can tax the gains.
- If the shares are held for more than 24 months, capital gains are long-term and taxed at 20% with indexation.
- If listed and held over 12 months, LTCG tax of 10% may apply beyond the ₹1 lakh exemption threshold.
Singapore-India DTAA: Tax on Dividends
Dividends paid by a Singapore company to a person resident in India
Singapore does not impose withholding tax on dividends paid by Singapore-resident companies. Therefore, dividends received by an Indian tax resident are taxable only in India, under Indian domestic law.
Example:
A Singapore company pays a dividend of SGD 10,000 to an Indian shareholder.
- Singapore tax: 0%
- India tax: Taxed as per Indian income tax laws (based on the applicable slab or rate for dividend income).
- Result: Only India taxes the income. No double taxation.
Dividends paid by an Indian company to a person resident in Singapore
Tax Treatment:
- Under Article 10 of the DTAA, India (as the source country) may impose withholding tax on dividend payments to a Singapore resident, subject to the following caps:
- 10% withholding tax if the Singapore recipient holds at least 25% of the equity of the Indian company.
- 15% withholding tax in all other cases.
- Singapore does not tax foreign dividends in most cases, especially when the foreign-sourced income is not received in Singapore or qualifies for tax exemption under Singapore’s foreign income exemption scheme.
- However, if the income is subject to tax in Singapore, the tax paid in India can be claimed as a credit against Singapore tax under the DTAA (foreign tax credit relief).
Example A – Holding ≥25%:
A Singapore company owns 30% of an Indian company and receives a dividend of INR 1,000,000.
- India tax: 10% withholding tax → INR 100,000 deducted at source.
- Singapore tax: Likely exempt under foreign income rules, but if taxed, Singapore allows a tax credit of INR 100,000.
- Result: No double taxation.
Example B – Holding <25%:
A Singapore-resident individual owns 10% of an Indian company and receives a dividend of INR 500,000.
- India tax: 15% withholding tax → INR 75,000 deducted at source.
- Singapore tax: Typically exempt, but if taxable, a credit is allowed for the INR 75,000 paid in India.
- Result: Avoidance of double taxation.
Singapore-India DTAA: Tax on Royalties
As per the DTAA (Article 12(3)), royalties include payments for:
- Use of or right to use copyrights, patents, trademarks, designs, secret formulas
- Use of or right to use industrial, commercial, or scientific equipment
- Information concerning industrial, commercial, or scientific experience
In both jurisdictions, domestic tax rates for royalties are generally 10% or higher for cross-border payments. The DTAA caps this rate at 10%, and more importantly, ensures double taxation relief.
Royalties Paid by a Singapore Company to a Resident of India
General Rule: Royalties arising in Singapore and paid to a tax resident of India may be taxed in India.
However, Singapore also retains the right to tax such royalties.
Tax Rate Cap: The royalty income may be taxed in Singapore at a rate not exceeding 10% of the gross amount, under Article 12(2) of the DTAA.
Example:
An Indian software company licenses its proprietary technology to a Singapore company for use in Singapore. The Singapore company pays S$100,000 in royalties to the Indian company.
- Singapore may tax the royalties at 10% (S$10,000).
- India may also tax the same income, but must allow a foreign tax credit to avoid double taxation.
Royalties Paid by an Indian Company to a Resident of Singapore
General Rule: Royalties arising in India and paid to a tax resident of Singapore may be taxed in Singapore.
However, India also has taxing rights.
Tax Rate Cap: Under Article 12(2), the royalty income can be taxed in India at a rate not exceeding 10% of the gross amount.
Example:
A Singapore-based media company licenses its copyrighted content to an Indian distributor and receives ₹10,00,000 in royalties.
- India may tax the royalties at 10% (₹1,00,000).
- Singapore may also tax the same income, but would generally offer relief through foreign tax credit under its domestic rules.
Royalty Tax Regime in Singapore
Royalties paid to non-residents are generally subject to a withholding tax of 10%, unless reduced by a tax treaty.
The 10% rate applies to:
- Payments for the use of or right to use intellectual property (IP) such as patents, copyrights, trademarks, etc.
- Payments for technical know-how or information.
No withholding tax applies on royalties paid to Singapore tax residents.
Royalty Tax Regime in India
Royalties paid to non-residents are generally subject to withholding tax at 10% under Section 115A of the Income Tax Act, plus applicable surcharge and cess. The effective rate may be slightly higher.
The term "royalty" is defined broadly and includes:
- Payments for the use of or right to use any intellectual property
- Payments for technical services (although these may sometimes fall under “Fees for Technical Services” instead of royalties)
For Indian residents, royalty income is taxed at the applicable slab rates unless eligible for presumptive taxation.
Singapore-India DTAA: Tax on Interest Income
Interest Paid by a Singapore Company to a Resident of India
Tax in Singapore:
Section 12(6) of the Singapore Income Tax Act states that certain payments to non-residents (including interest) are subject to withholding tax at 15%, unless reduced by a tax treaty.
Under the India–Singapore DTAA, withholding tax is capped at 15% of the gross interest amount (Article 11).
If the interest income is not deemed Singapore-sourced (e.g. funded by offshore operations), no tax may be withheld.
Example:
- Interest paid: USD 10,000
- Tax withheld under DTAA: 15% → USD 1,500
- Net interest remitted to Indian recipient: USD 8,500
Tax in India:
The taxability of foreign interest income received by a resident of India depends on whether the recipient is an individual or a company.
Recipient is a company:
- Global income is taxable in India for residents, including foreign-sourced interest.
- The gross amount (USD 10,000 in the above example) will be included in the company’s income and taxed at the applicable corporate tax rate (usually 22%–30% depending on the type of company and turnover).
- Foreign tax credit (FTC) will be allowed for the 15% tax withheld in Singapore, subject to India’s tax rules and documentation.
Recipient is an individual:
- Like companies, residents are taxed on their global income.
- The foreign interest income is added to total income and taxed at slab rates applicable to individuals.
- The individual may claim foreign tax credit for the 15% Singapore withholding tax, provided a TRC from Singapore and Form 67 are submitted.
Interest Paid by an Indian Company to a Resident of Singapore
Tax in India:
Interest paid to a non-resident is generally subject to withholding tax at 20%, plus applicable surcharge and cess — this can total around 21.84%.
- However, under the India–Singapore DTAA, the withholding tax is capped at 15% of the gross interest amount (Article 11).
- To avail the reduced DTAA rate, the Singapore resident recipient must provide a valid Tax Residency Certificate (TRC).
Example:
- Interest paid: USD 10,000
- Tax withheld under DTAA: 15% → USD 1,500
- Net interest remitted to Singapore: USD 8,500
Tax in Singapore:
Singapore taxation on the interest income received by a Singapore resident person will depend on whether the person is an individual or a company.
Lender is a company:
Foreign-sourced interest income is taxable in Singapore if it is:
- Received or deemed received in Singapore, and
- Not exempted under any specific scheme.
However, under Section 13(8) and Section 13(9) of the Singapore Income Tax Act, foreign-sourced income received by a Singapore tax-resident company may be exempt from tax if:
- The income was subject to tax in the source country (in this case, India); and
- The income is received in Singapore; and
- The income is from a business conducted outside Singapore.
In this case:
- Interest income was taxed in India (15% withholding tax).
- If received in Singapore and the conditions above are met, the income may be exempt under the foreign-sourced income exemption scheme.
- If exemption doesn’t apply, it will be taxed at the corporate income tax rate (currently 17%).
Lender is an individual:
Under Section 13(8) of the Income Tax Act, foreign-sourced interest income received by a Singapore tax-resident individual is generally exempt from tax, provided:
- The income is not received through a Singapore partnership or a trade/business carried on in Singapore.
In this case:
- The interest income received by the individual in a Singapore bank account is foreign-sourced.
- It is exempt from tax in Singapore, assuming the individual is not carrying on business through a partnership.
Singapore-India DTAA: Tax on Independent Services
Services Provided by a Singapore Resident to an Indian Company
Under Article 14 of the India–Singapore DTAA, income earned by a Singapore resident individual for providing professional or independent services to an Indian company is taxable only in Singapore, provided both of the following conditions are met:
- The individual does not have a fixed base regularly available to them in India for performing the work; and
- The individual does not stay in India for 90 days or more in any 12-month period.
Example:
A Singapore-based consultant provides remote business strategy advice to an Indian client without ever visiting India.
Tax implication: The consultant’s income is taxable only in Singapore. India cannot levy tax under the DTAA.
Note on GST:
Although no income tax applies in India for the consultant, the Indian client must pay applicable Indian GST under the Reverse Charge Mechanism (RCM) for import of services, as required by Indian GST law.
Services Provided by an Indian Resident to a Singapore Company
Under Article 14 of the India–Singapore DTAA, professional or independent services performed by an Indian resident are taxable only in India, unless:
- The Indian resident has a fixed base regularly available to them in Singapore for performing the services, or
- The Indian resident stays in Singapore for 90 days or more in any 12-month period.
If either condition is met, Singapore acquires the right to tax the income attributable to the services performed while physically present in Singapore.
Example 1: No Tax in Singapore
An Indian-based marketing consultant works remotely from India for a Singapore client and never visits Singapore.
Tax implication: Income is taxable only in India. Singapore has no taxing rights under the DTAA.
Example 2: Taxable in Singapore
An Indian consultant earns SGD 100,000 from a Singapore company over the year, and:
- Spends 120 days in Singapore,
- Performs 40% of the total work during that time in Singapore.
Singapore tax: Only the SGD 40,000 attributable to the work done while in Singapore is taxable there.
India tax: India may still tax the full SGD 100,000, but will offer Foreign Tax Credit (FTC) for taxes paid in Singapore, preventing double taxation.
Singapore-India DTAA: Tax on Director's Fees
Under Article 16 of the India–Singapore DTAA, director’s fees and similar payments received by a resident of one country in their capacity as a member of the board of directors of a company resident in the other country may be taxed in the country where the company paying the fees is located.
In practice, this means that:
- India has the exclusive right to tax director’s fees paid by Indian companies.
- Singapore has the exclusive right to tax director’s fees paid by Singapore companies.
- The country of the director's residence does not have taxing rights under the treaty.
Director’s Fees Paid by a Singapore Company to a Resident of India
Tax in Singapore:
- Singapore has exclusive taxing rights under the DTAA.
- The director’s fee is subject to Singapore personal income tax regime and will depend on the director's Singapore tax residency status.
- If non-resident → flat 15% withholding (withholding by the company)
- If resident → taxed at progressive rates based on total income.
Tax in India:
Since Singapore has exclusive taxing rights under the treaty:
- India does not tax this income.
- The Indian resident may need to disclose this foreign income, but no tax will be levied under the DTAA.
Director’s Fees Paid by an Indian Company to a Resident of Singapore
Tax in India:
- India has exclusive taxing rights under Article 16 of the DTAA.
- The director’s fee is taxed as income earned in India.
- The Indian company must deduct withholding tax at source (TDS) when paying the fees.
Applicable TDS Rate:
- Generally 30% + surcharge + cess for non-resident individuals.
- The effective rate may exceed 31%, depending on the amount and applicable surcharges.
Example:
A Singapore tax resident receives SGD 50,000 in director’s fees from an Indian company.
- India applies ~31% TDS → SGD 15,500.
- Net remitted: ~SGD 34,500.
Tax in Singapore:
- No tax is levied in Singapore, even if the fee is received in Singapore.
- This is because Article 16 of the DTAA grants India exclusive taxing rights, and Singapore respects this allocation under the treaty.
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