For NRIs managing wealth across borders, taxes are often the single biggest hurdle on returns. That's where cross border taxation planning in Singapore becomes more than a compliance requirement. It becomes a strategic tool for NRIs.
With over 650,000 Indians calling Singapore home and bilateral trade between the two countries crossing US$34.3 billion in FY2024-25, the India-Singapore Double Taxation Avoidance Agreement (DTAA) is shaping up to be one of the most powerful wealth planning tools for 2025.
The DTAA allows NRIs and global investors to optimise their tax exposure, protect wealth, and avoid paying tax twice on the same income. But its real value lies in helping high-net-worth individuals (HNWIs) structure their portfolios to minimise leakages and maximise returns.
India-Singapore DTAA Framework
The treaty, first signed in 1994 and significantly amended in 2017, aligns with the Base Erosion and Profit Shifting (BEPS) standards of the OECD and has steadily matured into a strong tax shield for NRIs. "Unlike other treaties, it offers unique benefits on capital gains and reduced withholding taxes on income streams like dividends, interest, and royalties.
The reason Singapore plays such a critical role is clear. Singapore is the 2nd largest investor in India, with a cumulative FDI inflow of US$ 174.89 billion from April 2000-March 2025.
For MNCs and private investors alike, Singapore is more than just a gateway to Asia. It is a jurisdiction that presents these organisations with stability, credibility, and favourable tax regimes.
The Zero-Tax Capital Gains Advantage
One of the most compelling features of the India–Singapore DTAA lies in Article 13(5), the residuary clause, which allocates taxing rights over capital gains on assets categorised as "any other property" exclusively to the country of residence.
In the recent judgment of Anushka Sanjay Shah v. ITO, Int. Tax Ward 4(2)(1) (ITA No. 174/MUM/2025, dated 26.03.2025), the Mumbai Income Tax Appellate Tribunal (ITAT) ruled in favour of the assessee, who had claimed exemption under Article 13(5) of the India–Singapore DTAA on capital gains arising from short-term investments in equity and debt mutual funds.
Let's understand this with an example.
- An Indian resident redeeming INR 1 crore of mutual funds would pay INR 12.5 lakh as long-term capital gains tax at the new rate of 12.5%.
- A Singapore tax resident, with proper documentation (Tax Residency Certificate, Form 10F, PAN, and declarations), would pay zero tax on the same redemption.
It's a clear pathway to compounding wealth faster for serious investors.
Why DTAA Matters More Than Ever Following 2025 Tax Updates
The Indian Union Budget 2024 introduced higher taxes on capital gains and lowered TDS thresholds, making it more costly for NRIs without treaty protection. STCG now stands at 20%, while LTCG has moved to 12.5%. The TDS exemption limit on interest income has been cut to INR 10,000, which means more non-residents face upfront deductions.
This makes the India-Singapore DTAA not just attractive, but essential. It cushions NRIs from these hikes and ensures investments remain efficient and predictable.
Tax Residency & Documentation Benefits
183-Day Rule, 3-Year Administrative Concession
- According to IRAS (Inland Revenue Authority of Singapore):
You are a tax resident if you are a foreigner who has stayed/worked in Singapore for at least 183 days in the previous calendar year, or continuously for three consecutive years (the three-year administrative concession).
Documentation is equally important. NRIs must secure:
A Tax Residency Certificate (TRC) from IRAS.
- Form 10F and declarations filed with Indian authorities.
- A valid PAN for Indian reporting.
It's advisable to apply for TRCs in October to cover the next financial year and coordinate with banks or AMCs early to avoid excess TDS.
Strategic Wealth Creation with DTAA Rates
Here's how the treaty changes the equation:
- Interest: Capped at 15% withholding (vs. 30.9% without the treaty).
- Dividends: 10% where shareholding ≥25%, 15% otherwise.
- Royalties & technical fees: Flat 10%.
- Capital gains on MF units: Treated as "any other property" under Article 13(5) — gains are taxable only in Singapore and fully exempt from Indian taxation, as confirmed by the Anushka Sanjay Shah v. ITO (2025 ITAT)
This structure allows NRIs to actively plan portfolio income streams, routing them through Singapore entities or timing redemptions to years of Singapore tax residency.
Advanced Strategies for NRIs & HNWIs
For wealthy individuals, the DTAA is all about designing a cross-border wealth strategy. Some practical approaches include:
- Portfolio structuring: Maximise mutual fund-based capital gains under treaty exemption.
- Timing optimisation: Align redemptions with years where Singapore residency is firmly established.
- Estate planning: Take advantage of the absence of inheritance and estate taxes in Singapore.
- Supplementary Retirement Scheme (SRS) participation: Use the Supplementary Retirement Scheme in Singapore for deferred tax benefits while optimising Indian exposure.
With the right approach, this creates a wealth ecosystem that is both compliant and highly efficient.
Common Pitfalls NRIs Must Avoid
The DTAA is powerful but not foolproof. Some common mistakes include:
- Misreading the Limitation of Relief (LoR) clause, which can restrict benefits in abusive cases.
- Missing deadlines for TRCs or declarations, which leads to higher TDS.
- Confusion over beneficial ownership, though Indian courts have largely upheld TRC as sufficient proof.
NRIs should avoid DIY approaches and instead treat DTAA planning as part of professional wealth management.
The Outlook Beyond 2025
India and Singapore are expanding cooperation in fintech, green finance, and digital trade.
There are recent updates about the expansion to include 19 Indian banks in the UPI–PayNow platform as of July 2025.
As Singapore overtakes Hong Kong in the Global Financial Centres Index in 2024, it further strengthens its role as the leading financial hub in Asia. For NRIs, this means the DTAA will remain relevant, adapt to global shifts, and open new avenues of wealth creation.
International tax advisory solutions for NRIs
The India-Singapore DTAA is more than a treaty. It's a powerful framework for cross-border taxation planning in Singapore. For NRIs, it offers zero capital gains tax on mutual fund units under Article 13(5), reduced withholding taxes, and robust protection from double taxation. These benefits come just at a time when India's domestic tax burden is rising.
At IMC Group, we specialise in helping NRIs leverage these opportunities through end-to-end international tax advisory solutions. Our professionals assist clients with:
- Securing and maintaining residency documentation (TRCs, Form 10F, PAN compliance).
- Designing cross-border portfolio structures aligned with DTAA provisions.
- Optimising wealth transfer and estate planning in a tax-efficient manner.
- Integrating Singapore's tax advantages into holistic global wealth strategies.
By combining technical expertise with practical execution, IMC Group ensures that NRIs and HNWIs can maximise the benefits of the DTAA and achieve sustainable, compliant wealth creation across borders.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
