Singapore offers low taxes and no capital gains tax, making it attractive for NRIs. But income earned outside Singapore can get tricky. If you’re an Indian living there, understanding the India-Singapore DTAA is key to reducing tax liabilities in both countries.

The India-Singapore DTAA, effective from 24 January 1994, was among India’s first major tax treaties post-1991 liberalisation. It aimed to provide tax clarity, attract portfolio and FDI inflows from Singapore, and enable greater participation of Indian professionals in Singapore’s growth. The treaty has been updated over time, with the latest amendment being the Third Protocol on 1 April 2017.

This article explains how the treaty works and how you can benefit.

Eligibility of Singapore tax residency under DTAA 

Singapore-based NRIs can claim benefits under the Singapore-India DTAA if they were physically living in Singapore for 183 days or more in the relevant calendar year. However, 2-year and 3-year administrative concessions are also provided for people with multi-year continuous employment, if the 183-day rule is not met.

Applicability of India-Singapore DTAA

Provisions under the India-Singapore Double Tax Agreement (DTAA) apply to both individual taxpayers and other legal entities that qualify as residents of either country or both.

It covers income tax and capital gains (though Singapore generally doesn’t tax capital gains).

Double taxation relief works through:

• Exemptions – Certain incomes are taxable only in the country of residence. Example: Capital gains on mutual funds are taxed only in the NRI’s country of residence according to Article 13 of the DTAA.

• Credits – Taxes paid in the source country (like TDS in India) can be claimed as a credit in the country of residence, reducing overall tax liability.

Impact of India–Singapore DTAA on Different Types of Income

Capital Gains

• Shares bought before 1 April 2017 : Taxable only in Singapore (no capital gains tax for individuals, hence very beneficial).

• Shares bought between 1 April 2017 – 31 March 2019 : Taxable in India at 50% of domestic rates (LTCG 10%/20%, STCG 15%/slab). Beneficial due to reduced rates.

• Shares bought after 31 March 2019 : Fully taxable in India at normal domestic rates.

• Mutual funds : Taxable only in Singapore (effectively exempt, since SG doesn’t tax capital gains).

• Immovable property in India : Taxable in India (LTCG 20%, STCG as per slab).

Dividends

• Dividends paid by Indian companies are subject to tax in India. Under domestic law, the rate is 20%, but the DTAA limits it to 15% for Singapore residents, making the treaty beneficial.

• In Singapore, foreign dividends are generally exempt under certain conditions, meaning no double taxation arises.

Interest Income

• Interest earned on NRE accounts is exempt from tax in both India and Singapore.

• Interest earned on NRO accounts is taxed at 30% in India under domestic law, but the DTAA reduces this to 15% for Singapore residents. This makes the DTAA beneficial in this case.

Rental Income from Indian Property

• Rental income from property in India is always taxable in India under applicable slab rates after permissible deductions. The DTAA does not provide relief here, but Singapore does not tax this income either.

Salary Income

• If an NRI works in India and does not meet DTAA exemption conditions (such as duration of stay or source of payment), the salary is taxable in India.

• If the NRI meets DTAA conditions (for example, salary paid by a foreign employer, short stay in India, and no employer’s permanent establishment in India), then the salary is taxable only in Singapore.

Here’s a quick glance at how different types of income are taxed for Singapore-based NRIs under the India–Singapore DTAA:

Which investments are most beneficial for NRIs given DTAA?

As per the provisions under DTAA between Singapore and India, the following types of investments are beneficial for NRIs with tax residence in Singapore;

• Mutual funds 

• NRO accounts 

• NRE accounts 

• Dividend-paying listed shares 

How to get a TRC in Singapore? 

A Tax Residence Certificate (TRC) is termed as Certificate of Residence (COR) in Singapore and the issuing authority is the IRAS or Inland Revenue Authority of Singapore. The procedure for getting a COR for Singapore NRI is;

• Apply through myTax portal (IRAS managed)

• Submit information supporting documents related to employment status, income, proof of residential address in Singapore, and Indian PAN

• IRAS takes a maximum of 7 days to verify an application and issue a COR digitally.  

• The validity for a COR is, in general, 1 year. 

In addition to COR, a Singapore NRI planning to claim benefits under the DTAA also needs to file the 10F form mandatorily with the Indian tax authority. 

How to file 10F in India? 

• Register on the Indian income tax department’s e-tax portal. 

• Long in to the portal and select 10F form under the ‘File Income Tax forms’ page

• Fill out details in the 10F form along with submission of COR received from Singapore authority. 

Singapore has no capital gains tax and lower income tax rates, making the India–Singapore DTAA useful for mitigating double taxation. NRIs should convert resident accounts to NRO for Indian income and use NRE accounts for foreign earnings. Rupeeflo simplifies managing these accounts with major Indian banks.

Frequently Asked Questions (FAQs):

1. How does the India-Singapore DTAA stay relevant?
   The DTAA allows amendments for future or similar taxes in India or Singapore, keeping it up to date. For example, 2017 changes addressed source-based capital gains taxation.

   
   

2. How are dual-resident NRIs’ taxes decided?
   Tie-breaker rules determine tax residency:

   • Permanent home: Country with the NRI’s main home.

   • Centre of vital interests: Country of closest personal/professional ties.

   • Habitual abode: Country where most time is spent.

   • Nationality: Tax residency by citizenship if previous rules are indecisive.

   • MAP: Competent tax authority decides if still unresolved.

   
   

3. What are the 2-year and 3-year administrative concessions for Singapore tax residency?
   NRIs employed in Singapore continuously for 3 years can qualify for tax residency even if they spend less than 183 days in the 1st or 3rd year.

   
   

4. How is Singapore tax residency determined?

   • Qualitative: Permanent residents or those with habitual/economic ties to Singapore.

   • Quantitative: Physical presence of 183+ days in a year.

   • Work pass: NRIs with a work permit >1 year may claim residency for that year.