A 1994 treaty that three protocols have rewritten
The agreement between India and Singapore was concluded on 24 January 1994 and entered into force on 27 May 1994. Very little about how it is used today is decided by that original text.
Three protocols have amended it — signed on 29 June 2005, 24 June 2011 and 30 December 2016 — and the Multilateral Instrument has amended it again. Between them they rewrote the capital gains article twice, added an anti-abuse article, replaced the exchange-of-information article, and inserted a principal purpose test that did not exist when any of the protocols were negotiated.
A great deal of commentary still describes the treaty as it stood before 2017, when Singapore was a standard holding jurisdiction for Indian equity. That description is now wrong in its central respect, and the difference is not a rate but a whole taxing right.
Capital gains: the line drawn on 1 April 2017
The 2005 Protocol deleted paragraphs 4, 5 and 6 of Article 13 and replaced them with a single paragraph allocating gains on any property other than that in paragraphs 1, 2 and 3 to the state of residence alone. That is what made the treaty attractive: shares in an Indian company sold by a Singapore resident sat outside the Indian charge entirely.
The Third Protocol of 30 December 2016 ended that, and it did so with a date rather than a taper. With effect from 1 April 2017 it deleted paragraph 4 and inserted three new ones:
| Paragraph | Effect |
|---|---|
| 4A | Gains on shares acquired before 1 April 2017 taxable only in the alienator's state of residence |
| 4B | Gains on shares acquired on or after 1 April 2017 may be taxed in the state where the company is resident |
| 4C | Transitional: gains within 4B arising between 1 April 2017 and 31 March 2019 taxable in the source state at not more than 50% of the domestic rate |
A new paragraph 5 sends everything not covered by paragraphs 1, 2, 3, 4A and 4B back to the residence state alone.
Three points follow that are routinely got wrong. The transitional half-rate in paragraph 4C expired on 31 March 2019 and has no application to anything happening now. The test in 4A and 4B is the acquisition date, not the disposal date, so the relevant fact is often a decade old and evidenced by contract notes rather than by anything on the current return. And where 4B applies, the treaty imposes no cap at all — India taxes at whatever its domestic law provides, which changes with each Finance Act.
Article 24A: a limitation of benefits with a narrow field
The Third Protocol also inserted Article 24A with effect from 1 April 2017, and its scope is much smaller than its reputation. By its own terms it denies "the benefits of paragraph 4A or paragraph 4C of Article 13" and nothing else. It is not a general limitation-of-benefits article policing the dividend, interest, royalty or employment provisions.
Within that field it operates in three ways. Paragraph 1 is a primary purpose test: the benefit is denied if the resident's affairs were arranged with the primary purpose of taking advantage of it. Paragraph 2 excludes a shell or conduit company, defined as any legal entity within the definition of resident with negligible or nil business operations, or with no real and continuous business activities carried out in that state.
Paragraphs 3 and 4 then supply a quantified deeming rule running in both directions. A resident is deemed to be a shell or conduit company where annual expenditure on operations in that state is less than S$200,000 in Singapore or Indian Rs 5,000,000 in India, and deemed not to be one where the expenditure is at or above those amounts, or where it is listed on a recognised stock exchange — defined by name for Singapore and by SEBI recognition for India. For the paragraph 4A grandfathering benefit the threshold must be satisfied in each of the two 12-month periods within the preceding 24 months from the date the gains arise; for the expired paragraph 4C benefit a single preceding 12-month period applied.
The deeming is asymmetric in practice. Clearing the expenditure threshold means you are not deemed a shell or conduit — it does not mean paragraph 1 has been satisfied, and an explanation appended to the article confirms that entities without bona fide business activities are caught by paragraph 1 regardless.
The Third Protocol also deleted Articles 1, 3, 5 and 6 of the 2005 Protocol from the same date. Article 6 had tied the Singapore capital gains exemption to the continued existence of the equivalent provision in the India-Mauritius treaty; that linkage no longer exists.
The other clause called limitation: Article 24
The treaty has contained an Article 24 headed "Limitation of Relief" since 1994, and it is an entirely different mechanism. Where the agreement exempts income or reduces the tax on it in one state, and the other state taxes that income by reference to the amount remitted to or received there rather than the full amount, the exemption or reduction applies only to so much of the income as is remitted or received. Paragraph 2 carves out government income and persons approved by the competent authority.
This is a response to remittance-basis taxation, not an anti-treaty-shopping rule. Conflating Article 24 with Article 24A is common, and it leads people to look for substance conditions where the text imposes none, or to miss a remittance condition that genuinely bites.
Article 28A and the principal purpose test
Two further layers sit above all of this.
The Third Protocol added Article 28A, providing that the agreement shall not prevent a Contracting State from applying its domestic law and measures concerning the prevention of tax avoidance or evasion. That is the provision that preserves India's domestic anti-avoidance machinery against the argument that the treaty displaces it.
The Multilateral Instrument then replaced the preamble and inserted Article 29A, Prevention of Treaty Abuse. A benefit is not granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of an arrangement or transaction, unless it is established that granting it would accord with the object and purpose of the relevant provisions.
Compare the thresholds. Article 24A asks whether affairs were arranged with the primary purpose of obtaining two specific paragraphs of Article 13. Article 29A asks whether obtaining the benefit was one of the principal purposes of anything under the treaty. The second is both wider in subject matter and easier for a revenue authority to establish. Singapore's implementing order entered into force on 1 October 2019, taking effect for Singapore withholding taxes on amounts paid on or after 1 January 2020 and for other taxes from basis periods beginning on or after 1 April 2020. India's effective dates run to its own ratification timetable and should be confirmed for the year in question.
Employment income and the 183-day condition
Article 15(1) allocates employment income to the state of residence unless the employment is exercised in the other state, in which case that other state may tax the remuneration derived from it.
Article 15(2) then removes the source state's right, but only where all three of its conditions hold: presence in that state of not more than 183 days in the aggregate in the relevant fiscal year; remuneration paid by or on behalf of an employer who is not a resident of that state; and remuneration not borne by a permanent establishment or fixed base the employer has there. All three, not any one. Failing a single condition restores the source state's right over the remuneration attributable to work performed there, rather than over some excess above a threshold.
Note also that the count runs against "the relevant fiscal year", not the rolling twelve-month period used in more modern treaties, and India's fiscal year ends on 31 March while Singapore assesses on a calendar-year basis. A posting that straddles a year end can produce a materially different answer from an identical posting sitting inside one.
Article 15(3) is easy to miss and occasionally decisive: where a recipient meets all three conditions in paragraph 2, but the remuneration is deductible as an expense against fees for technical services derived by the employer under Article 12 and the employer has no permanent establishment in the other state, the remuneration may still be taxed there, capped at 15% of the gross amount.
Directors' fees have no threshold at all
Article 16 is a single sentence, and its brevity is the point. Directors' fees and similar payments derived by a resident of one state in his capacity as a member of the board of directors of a company resident in the other state may be taxed in that other state.
There is no day count, no minimum amount and no requirement of physical presence. Board membership plus the company's residence is the whole test, and a director who never travels can be within the charge.
The Singapore side shows what that means operationally. IRAS requires tax to be withheld at 24% on remuneration paid to a non-resident director of a Singapore tax resident company — 22% applied to income due and payable from 1 January 2016 to 31 December 2022 — and the obligation does not depend on where the board meeting was held. Because Article 16 caps nothing, the treaty does not reduce that rate.
The boundary between Articles 15 and 16 is where the work sits. A person who is both a board member and an executive employee has two streams of remuneration, and only the board-capacity fees fall under Article 16. Separating them at the point of payment is considerably easier than reconstructing the split later.
The TRC is a condition, not a formality
Indian law does not treat a residence certificate as helpful evidence. It treats it as a precondition. Under the Income-tax Act 1961, section 90(4) provided that a non-resident is not entitled to claim relief under a treaty unless a certificate of residence is obtained from the government of the country of residence, with section 90(5) and Rule 21AB requiring further prescribed particulars, supplied in Form 10F.
That architecture carried into the Income-tax Act 2025, which replaced the 1961 Act for tax years beginning on or after 1 April 2026. The treaty provisions now sit in section 159, which likewise entitles a non-resident to claim relief only where a certificate of residence is obtained from the government of the other country. Form numbering changed with the new rules, so a template saved a year or two ago may no longer be the current one — check before filing rather than after.
For a Singapore resident the certificate is a Certificate of Residence issued by IRAS, which confirms Singapore tax residence for the purpose of claiming treaty benefits abroad. Individual residence in Singapore generally turns on living or working there for at least 183 days.
What a certificate establishes is residence. It does not establish entitlement, and it does not answer Article 24A or the principal purpose test, both of which operate on top of a valid certificate. Our guide to DTAA relief and the Tax Residency Certificate covers the mechanics of claiming relief in more detail.
What lands on the Singapore side
Singapore does not levy a general capital gains tax on individuals, which is why the pre-2017 position was so effective: the Indian charge was switched off by treaty and no Singapore charge replaced it.
That assumption now needs qualifying at the entity level. From 1 January 2024, section 10L of the Singapore Income Tax Act treats gains from the sale or disposal of foreign assets received in Singapore as chargeable income where the recipient is an entity of a relevant group lacking adequate economic substance in Singapore, with separate treatment for foreign intellectual property rights. It is aimed at entities rather than individuals, but a gain arriving in Singapore can no longer be assumed to land untaxed without checking the structure holding it.
Where your Indian residence position is itself in transition, that status often matters more than the treaty article — see RNOR planning for returning NRIs and, for portfolio holdings, NRI mutual funds and equities.
Compliance caveat
This guide describes the India-Singapore agreement as amended by the protocols of 2005, 2011 and 2016 and by the Multilateral Instrument, together with the Indian and Singapore domestic provisions referred to above. It does not address business profits and permanent establishment questions, the fees-for-technical-services article, pensions and government service, indirect transfer provisions in Indian domestic law, transfer pricing, or the position of partnerships and trusts. Treaty articles are summarised rather than reproduced, and domestic rates and thresholds change with each Finance Act in India and each Budget in Singapore, so any figure here should be confirmed as current for the year in question. Effective dates for the same amendment differ between the two states. This is a simplified guide, not tax advice. Global Investments is not authorised by the Financial Conduct Authority or by the Securities and Exchange Board of India. Confirm your position with qualified advisers in both India and Singapore before acting.
How Global Investments can help
Most India-Singapore questions we see turn on a fact that is easy to establish now and expensive to establish later: when a shareholding was acquired, which capacity a payment was made in, and whether the entity claiming residence has the operating substance the treaty asks about. Our advisers work with clients holding assets or working across both jurisdictions to map which article governs each income stream, to identify where the acquisition-date line in Article 13 falls across an existing portfolio, and to assemble the residence documentation before a payer deducts rather than after. Where a corporate structure is involved, we coordinate with Indian and Singapore tax specialists on the substance and principal purpose questions rather than treating the treaty text as the end of the analysis.
Frequently asked questions
Are gains on Indian shares bought before April 2017 still protected for a Singapore resident?
Paragraph 4A of Article 13, inserted by the Third Protocol, provides that gains from the alienation of shares acquired before 1 April 2017 in a company resident in a Contracting State are taxable only in the state where the alienator is resident. There is no sunset date on that paragraph, so the protection is tied to the acquisition date rather than to a closing window. It is not unconditional, though: Article 24A can withdraw the paragraph 4A benefit, and the principal purpose test inserted by the Multilateral Instrument sits above the whole treaty.
What does the S$200,000 expenditure test in Article 24A actually measure?
It measures annual expenditure on operations in the state where residence is claimed, and it works as a deeming rule in both directions. A resident is deemed to be a shell or conduit company if that expenditure is below S$200,000 in Singapore or Indian Rs 5,000,000 in India, and deemed not to be one if it is at or above those amounts. For the paragraph 4A grandfathering benefit the threshold must be met in each of the two 12-month blocks in the 24 months before the gains arise. Listing on a recognised stock exchange is an alternative route out.
Does the treaty still shelter gains on Indian assets that are not shares?
The paragraphs the Third Protocol inserted are drafted by reference to shares in a company resident in a Contracting State. Paragraph 5 as substituted allocates gains on any property not covered by paragraphs 1, 2, 3, 4A and 4B to the state of residence alone. Whether a particular instrument counts as a share for this purpose is an interpretive question that has been argued more than once, and it should be tested against the specific security and the facts rather than assumed from the label. Immovable property and permanent establishment assets remain separately allocated to the source state.
How many days can I spend working in India before India taxes my Singapore employment income?
Article 15(2) removes the Indian taxing right only if three conditions all hold: presence in India of not more than 183 days in the aggregate in the relevant fiscal year, remuneration paid by or on behalf of an employer who is not resident in India, and remuneration not borne by a permanent establishment or fixed base the employer has in India. Failing any one of the three restores India's right to tax the remuneration attributable to work performed there, not merely the amount above a threshold. The count runs against a fiscal year rather than a rolling twelve months.
Are directors' fees from an Indian company taxable in India if I never travel to India?
Article 16 allows the state where the company is resident to tax directors' fees and similar payments derived by a resident of the other state in his capacity as a member of the board. It contains no day count, no de minimis amount and no requirement of physical presence, so board membership in an Indian resident company plus payment in that capacity is the entire test. The mirror position applies in Singapore, where withholding is required on remuneration paid to a non-resident director regardless of where the board met.
Do I need a fresh Tax Residency Certificate every year?
A certificate of residence covers a specified period, so in practice a claim relating to a later period needs a certificate covering that period. Indian law treats the certificate as a precondition of relief rather than as supporting evidence, which means it has to be in hand before entitlement is asserted, not produced afterwards in response to an enquiry. Payers in India deduct at domestic rates unless entitlement has been established before payment is made, so the practical deadline is usually the payment date rather than the filing date.
Did the Multilateral Instrument change the India-Singapore treaty?
Yes. Singapore and India both signed the Multilateral Instrument on 7 June 2017 and ratified it in December 2018 and June 2019 respectively. It replaced the treaty preamble and inserted a new Article 29A, Prevention of Treaty Abuse, denying a benefit where it is reasonable to conclude that obtaining it was one of the principal purposes of an arrangement, unless granting it accords with the object and purpose of the relevant provisions. That test applies across the whole agreement, not only to the capital gains article.
This guide is general information only and does not constitute financial, legal or tax advice. Global Investments is not authorised by the Financial Conduct Authority or by the Securities and Exchange Board of India. Indian tax and exchange control rules change and individual circumstances vary. Always seek advice from a qualified adviser in the relevant jurisdiction before acting.