India Singapore Double Taxation Avoidance Agreement

The Double Taxation Avoidance Agreement (DBA) between India and Singapore is a tax treaty between two countries to avoid double taxation of income that can flow between the two countries. Learn more about singapore`s taxes, including tax rates, income tax system, types of taxes and Singapore taxes in general. C orntries around the world enter into different tax treaties. These contracts are beneficial to residents (commercial and individual units) of the countries parties to the agreement. They can provide for tax exemptions, tax credits and a general reduction in tax rates. Singapore has concluded with many DBA countries. These agreements contribute to the efficiency of Singapore`s tax system. This article highlights the important provisions of the India-Singapore DBA, tax applicability, tax rates, the scope of the agreement and the benefits of the DBA. Similar fees or payments collected by the country of a contracting country as the director of a company established in another contracting state are taxed in that other contracting country. In other words, the fees charged by the directors are taxable in the country where the company that pays the fees is taxable. The Convention on the Prevention of Double Taxation (DBA) between Singapore and India came into force in 1994.

The provisions of this agreement were amended by a protocol signed on 29 June 2005. The second protocol was signed on June 24, 2011 and came into effect on September 1, 2011. The DBA agreement eliminates double taxation of income between Singapore and India and reduces the overall tax burden on residents of both countries. However, in order to avoid the misuse of this exemption, particularly by residents of third countries who set up holding companies in Singapore to benefit from the exemption from yields, a clause “Limitation of Benefits (LOB) ” was added in the contract. Under this clause, a Singapore company entitled to a shareholding in the company is not entitled to the exemption from social capital gains if the sole purpose of the company`s incorporation was to benefit from this benefit. In addition, companies with only a negligible business in Singapore and no continuity in their operations are not entitled to this benefit. Under the LOB clause, the agreement does not apply to shell companies. Income Tax Act 1961: Section 90 communication: Agreement between the Government of the Republic of India and the Government of the Republic of Singapore to avoid double taxation and prevent tax evasion with respect to income tax, which wants an agreement to avoid double taxation and prevent tax evasion with respect to income taxes. d. the concept of “company”: any entity or entity that is considered an entity or entity under the tax legislation in force in the relevant contracting states; If Singapore and India do not have a DBA in force, the company`s profits could be taxed in both Singapore and India.

In such a case, the profits of the establishment would bear twice the tax burden. This underlines the importance of the DBA and how it avoids double taxation of corporate profits. Singapore and India have signed the DBA to address this issue and ease the overall burden on a taxpayer. In accordance with the signing of the agreement, all taxable income in both countries is taxable in only one country, in accordance with the terms of the DBA.