India-Singapore DTAA: Double Tax Avoidance Agreement
Countries around the world execute various tax treaties to provide benefits for both business entities and individuals. Double taxation avoidance agreements or double tax treaties offer tax exemptions, tax credits, and overall reductions in tax rates.
Singapore currently has several DTAAs with other countries. These agreements contribute to the efficiency of Singapore’s tax system. This article highlights important provisions of the India-Singapore DTAA, tax applicability, tax rates, the scope of the agreement, and the advantages of the DTAA between India and Singapore.
What Is the DTAA between India and Singapore?
The DTAA between India and Singapore is a tax treaty that avoids the double taxation of income between Singapore and India and reduces the overall tax burden of the residents of both countries.
Without the India-Singapore DTAA , income is liable to be double taxed (i.e., each country may levy its own tax on the same income). This double taxation unfairly penalizes income flows between countries, thereby discouraging trade and commerce.
To address this problem and reduce the overall taxpayer burden, Singapore and India signed the treaty. Therefore any income that’s taxable in both the countries will be taxable only in one country as per the terms of the DTAA.
India-Singapore DTAA Updates
India-Singapore Double Tax Treaty Timeline
1994 January 30The Double Taxation Avoidance Agreement between Singapore and India comes into effect
2005 June 29Provisions are modified by a protocol to eliminate most taxes on capital gains
2011 September 1A second protocol to incorporate OECD’s standard for the exchange of information for tax purposes comes into force
2016 December 30A third protocol is signed to preserve the majority of tax exemptions on capital gains
2020 February 1India announces its withdrawal of the Dividend Distribution Tax
2020 April 1The OECD’s Multilateral Instruments come into force for India and Singapore
Scope of India-Singapore DTAA
What Taxes Will I Owe Under the India-Singapore Double Tax Agreement?
Double Tax Avoidance Agreement at a Glance
Type of income or payment
Where it is taxed
Income from immovable property
Profits from business
Profits from shipping and air transport
Royalty and fees for technical services
Independent personal services
Dependent personal services
Income of artists and sportspersons
Pension and annuity
Payments to students and trainees
Payments to visiting teachers and researchers
In some unique circumstances, income may be taxable both in the state where the income arises and the recipient’s state of residence even if the DTAA terms are followed. In such cases, the Singapore India DTAA allows specific exemptions for such unique one-off situations.
To learn more, you can find a full copy of the India-Singapore Double Tax Treaty Agreement.
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