Published Mon, 09 Feb 2026 | Updated Mon, 09 Feb 2026 International taxation
The Double Tax Avoidance Agreement (DTAA) between India and Singapore is an agreement between the two countries that prevents double taxation on same income. The agreement between the two countries make sure that a taxpayer does not pay tax on the same income in both India and Singapore.
This treaty between two countries makes it easier and more attractive for investors and professionals to work or invest in both countries. DTAA Provides taxpayers with a relief in their tax burden as taxpayers can claim a credit for tax paid in one country or relief for double taxation in other countries.
Singapore
The DTAA covers the following taxes imposed by the law of Singapore:
Income Tax imposed by the Singapore Income Tax Act for individuals and companies.
Also Read - Income Tax Rates In India for Financial Year 2025-26
India
The DTAA applies to the following taxes in India:
Illustration (India– Singapore DTAA)
Mr Z is a resident of Singapore who invests in an Indian company and earns dividend and interest income from India. Since the income arises in India, it is taxable in India under Article 10 (Dividends) and Article 11 (Interest) of the India–Singapore DTAA, subject to the tax rates prescribed under the agreement.
At the same time, as Mr Z is taxable in Singapore on his global income, such income may also be considered under Singapore’s domestic tax laws. To avoid double taxation, Mr Z is allowed to claim credit in Singapore for the tax paid in India, in accordance with the relief provisions of the DTAA.
Accordingly, the India–Singapore DTAA ensures that income earned in India by a Singapore resident is taxed in a fair and efficient manner, either through restricted withholding tax in India or by granting foreign tax credit in Singapore.
The term “Contracting States” refers to the two countries that have entered into a Double Tax Avoidance Agreement (DTAA) with each other.
Resident refers to any individual who is liable to pay taxes in a country because of factors such as residence, domicile, citizenship, place of incorporation, or place of management, as stipulated in the tax laws of the country.
If a person qualifies as a resident of both India and Singapore, the DTAA provides specific rules to determine a single country of residence.
|
Situation |
Residence is determined in the country where |
|
Permanent home available in one country |
The permanent home exists |
|
Permanent home in both countries |
Personal and economic relations are Stronger |
|
Permanent home in neither country |
Habitual place of stay |
|
Habitual stay in both countries |
Nationality |
|
National of both or neither country |
Determined by mutual agreement between tax authorities |
General Rule
Income earned from immovable property is taxable in the country where the property is located, irrespective of the residential status of the taxpayer.
Example: If a resident of Singapore earns rental income from immovable property situated in India, such income will be taxable in India, as the property is located in India.
Income Covered Under Immovable Property:-
As per the provisions of the agreement, the following types of income are treated as income from immovable property:
The business profits of an enterprise of one of the Contracting State May be taxed only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that state. If it has such a permanent establishment, the other State may tax the profits only of that establishment.
Where a business operates in the other Contracting State through a Permanent Establishment, the profits attributable to the PE shall be calculated as if the PE were a separate and independent Business, carrying out similar activities under similar conditions.
While computing the profits of a Permanent Establishment, all expenses incurred in the context of the PE shall be allowed as deductions, including executive and general administrative expenses, whether incurred in the country where the PE is located or elsewhere.
No profits shall accrue to a Permanent Establishment simply on account of its acquiring goods or merchandise for the enterprise.
The procedure used in calculating the profits that should be allocated to the Permanent Establishment must also remain constant year in, year out, except in the event of a valid and sufficient reason.
In so far as the profits are comprised of items which are brought into account separately in respect of an enterprise or property under the provisions of any other Articles of this Convention, the provisions of those Articles shall apply without being affected by this Article.
Example:
XYZ Co., Ltd., a Singapore company, pursues business in engineering consultancy services. The company opens an Indian branch in India to undertake contracts with Indian clients. The Indian branch falls under a Permanent Establishment (PE) in relation to Singapore under the DTAA between Singapore and India.
The above-mentioned business profits of XYZ Co. Ltd. Are taxable in Singapore.
But since the company has a PE in India, India is eligible for taxing only the profits that are attributable to the PE in India.
The profit of the Indian PE is calculated on a stand-alone basis as if it were a separate entity undertaking engineering consulting activities.
All costs relating to the Indian PE, such as salaries in India and management support fees in Singapore, are deductible.
The same way of calculating profits is used each year except when there’s been a major change in the way the business operates.
General Rule
The dividends paid by a company which is a resident of one of the contracting states to a resident of another contracting state are also liable to tax in the country of residency of the shareholder.
On the other hand, the country of residence of the corporation making the dividend payment equally has a right to tax this income from dividends. This is within the limitations set by the terms of the DTAA.
Example: In the case of an Indian company paying dividends to an individual resident of Singapore, the said dividend income is taxable in Singapore based on the residency of the shareholder. Yet India, being the resident country of the paying entity, withholds tax on dividends at not more than the prescribed statutory rates under the treaty.
|
Particulars |
Maximum Tax Rate |
|
Beneficial Owner is a company which owns at least 25% of the voting powers in the company paying the dividend |
10% of the gross amount of dividend |
|
All other cases |
15% of the gross amount of dividend |
Interest incomes derived by a resident of one country from the other are governed by special rules to avoid double taxation.
This interest arising in India and payable to a resident of Singapore may be taxed in Singapore, since it is the country of residence for the recipient.
However, India is the source country where the interest arises; hence, as a source country, it will also have the right to tax such an interest.
The country in which the interest arises may also tax the interest, but if the recipient is the beneficial owner, the maximum tax rate in the country of origin cannot exceed:
Article 12 – ROYALTIES
Royalties and fees for technical services derived in one contracting states and Paid to a resident of other contracting state are to be taxed in the country of residence of the beneficiary.
Example: The royalties/FTS received in India and paid to a person in Singapore may be taxed in Singapore since it is the country of residence of the person receiving royalties/FTS.
At the same time, in the case of India, being a country of origin in which the income is generated, it also has the right to tax the royalty payment or the FTS.
Notwithstanding this, the tax charged by India is capped at the maximum rate provided under DTAA, if the recipient is the beneficial owner of such income.
|
Nature of Income |
Maximum Tax Rate In India |
|
Maximum Tax Rate in India Royalties and Fees for Technical Services (FTS) |
10% of the gross amount of such royalties or fees |
Article 13 – Capital Gains
The capital gains arising from the transfer of assets are taxable according to the taxation laws of the contracting country to which the right of taxation applies.
In general, the right to tax capital gains depends on the nature of the transferred asset and the provisions under Article 13, as interpreted in the light of the national taxation laws of the concerned countries.
As the right to tax has been determined under the DTAA, the concerned country has the right to tax the capital gain under the domestic income tax laws.
Example: If any citizen of Singapore transfers any immovable property in India, the capital gain arising from the transfer of such immovable property will be liable to be taxed in India since India is the country where the immovable property is situated. The tax will be paid as per the provisions of the Indian Income Tax Act of 1961.
Article 16 – Director fees
Fees for directing and other similar fees paid, directly or indirectly, to a resident in one of the contracting in his capacity as a director of a company which is a resident of the other contracting state, are eligible for tax in the other contracting state.
Example:
Mr A is a resident of India. He is a director on the board of a company that is a resident of Singapore. He receives directors’ fees from the Singapore Company for attending board meetings.
In this case, the directors’ fees are liable to tax in Singapore, since the company paying the fees is a resident of Singapore, although Mr A is a resident of India.
The double taxation as per India Singapore DTAA shall be avoided as below:-
In India:
In Singapore:
|
Particulars |
Rate as per Indian Law |
Rate as Per DTAA India- Singapore |
|
Dividend Income |
20% |
10% |
|
Interest Income |
20% |
10% |
|
Royalty |
20% |
10% |
|
Fees for technical service |
20% |
10% |
|
Director Fees |
Slab rate |
Taxable As per Domestic law |
The Double Tax Avoidance Agreement (DTAA) entered between India and Singapore aims at ensuring that income is not liable to double taxation and that taxpayers are aware of the taxation of their income.
The DTAA eliminates tax uncertainties by providing a guarantee against double taxation and ensuring that income is taxed in the right place. Furthermore, to avoid double taxation in their country of residence, taxpayers are required to claim foreign tax credits in their country of residence. Therefore, to ensure proper taxation and tax planning between India and Singapore, one must be familiar with the taxation laws of the countries and the requirements of the DTAA.
