A guide to Singapore-India tax treaty: What businesses need to know

Is there a Singapore-India tax treaty?

Yes. The DTAA between India and Singapore has been in force since 1994. This bilateral agreement creates a framework that prevents individuals and businesses from being taxed twice on the same income earned across both jurisdictions.

The treaty has been amended multiple times, most recently incorporating OECD's Multilateral Instrument provisions in 2019. These updates strengthened compliance measures and introduced anti-abuse rules to prevent treaty shopping whilst maintaining the core benefits for genuine cross-border operations.

For small businesses and professional services firms operating internationally, this treaty provides certainty around tax obligations and reduces the overall tax burden when conducting business between the two countries.

What the Singapore-India tax treaty covers

The India-Singapore tax treaty applies to several types of taxes. In India, this includes income tax along with applicable surcharges. In Singapore, it covers income tax imposed under the Income Tax Act.

The treaty provides relief on multiple income streams:

• Business profits earned through operations in either country.
  
• Dividends distributed to shareholders across borders.
  
• Interest payments on loans and financing arrangements.
  
• Royalties for intellectual property and technology licensing.
  
• Fees for technical services (FTS) provided by professionals and consultants.
  
• Capital gains from selling shares and other assets.
  
• Employment income for individuals working across both jurisdictions.
  
• Directors' fees paid to board members.
  
• Income from immovable property such as rental income.
  
• Pensions and annuities received by retirees.
  

By setting maximum tax rates and defining where income can be taxed, the agreement creates predictability for founders and finance teams managing multi-market operations.

Tax residency and tie-breaker rules

Understanding residency is fundamental to accessing treaty benefits. Under the India-Singapore DTAA, a "resident" is any person liable to tax in either country by reason of domicile, residence, place of management, or similar criteria.

For individuals, if you're considered a resident of both countries, the treaty uses tie-breaker rules in this sequence:

• Where you have a permanent home available to you.
  
• Where your personal and economic ties are stronger, known as your centre of vital interests.
  
• Where you habitually reside on a day-to-day basis.
  
• Your nationality or citizenship status.
  
• Mutual agreement between tax authorities if none of the above criteria resolve the residency question.
  

For companies, residency typically follows where the place of effective management is located. If a company is deemed resident in both jurisdictions, the tax authorities must resolve this through mutual agreement.

To claim tax relief under the treaty, you need a Tax Residency Certificate (TRC) from the relevant authority: the Inland Revenue Authority of Singapore (IRAS) for Singapore residents, or the Indian Income Tax Department for Indian residents.

In India, a Tax Residency Certificate alone may not be sufficient to claim treaty benefits. Where prescribed details are missing, non-residents must also submit Form 10F, and failure to do so can result in domestic withholding tax rates being applied instead of treaty caps.

Withholding tax rates under the treaty

Under the India–Singapore tax treaty, withholding tax rates on certain cross-border payments may be reduced, subject to specific conditions and domestic tax rules in both countries.

The treaty places caps on withholding tax for income such as dividends, interest, and royalties, but the actual rate applied depends on factors including the nature of the income, the recipient’s tax residency, beneficial ownership, and how each country’s domestic tax law interacts with the treaty.

As a result, businesses should not assume that treaty rates apply automatically, as local tax regulations and eligibility requirements can affect the final withholding tax outcome.

Dividends

The treaty distinguishes between dividends based on shareholding:

From India to Singapore:

Under the treaty, India may levy withholding tax on dividends paid to Singapore residents, but the rate is capped at 10% if the Singapore recipient holds at least 25% of the equity, or 15% in all other cases, subject to eligibility and compliance with Indian domestic tax rules.

The reduced withholding tax rates apply only if the recipient is the beneficial owner of the dividend income and meets applicable substance and anti-abuse requirements under Indian tax law.

Since India abolished the Dividend Distribution Tax (DDT) in 2020, dividends are now taxed at the shareholder level. In practice, Indian tax is typically collected through withholding on dividend payments to Singapore recipients, reducing the cash received, although such tax may be creditable in Singapore, subject to local tax rules.

From Singapore to India:

Singapore doesn't impose withholding tax on dividends paid by Singapore companies. Therefore, dividends received by an individual in India are taxed solely under Indian domestic law.

Interest

Under the treaty, interest paid from one country to a resident of the other may be taxed in both countries. However, the source country’s withholding tax is capped at:

• 10% for interest paid on bank or similar financial institution loans
  
• 15% in all other cases, provided the recipient qualifies for treaty benefits.
  

These limits may not apply if the interest is connected to a permanent establishment in the source country or if the interest rate exceeds an arm’s-length amount.

Example:

An Indian company pays interest to a Singapore bank on a cross-border loan. Under the treaty, India may withhold tax on the interest, but the rate is capped at 10% because the lender is a bank. The Singapore bank may still be taxed on this income in Singapore, but any Indian withholding tax may be creditable, subject to Singapore tax rules.

Royalties

Under the treaty, royalties paid from one country to a resident of the other may be taxed in both countries. However, the source country’s withholding tax is capped depending on the type of royalty payment:

• 15% for most royalties, such as payments for intellectual property, including copyrights, software, patents, trademarks, designs, or know-how
  
• 10% for royalties paid for the use of industrial, commercial, or scientific equipment
  

These caps apply only if the recipient qualifies for treaty benefits and may not apply if the royalty income is connected to a permanent establishment in the source country or if the payment exceeds an arm’s-length amount.

In practice, tax authorities assess the substance of royalty arrangements rather than relying solely on contractual labels. Payments may be recharacterised during audits, which can affect the applicable withholding tax rate and compliance obligations under the treaty.

The DTAA defines royalties broadly to include payments for:

• Use of copyrights, patents, trademarks, and designs
  
• Use of industrial, commercial, or scientific equipment
  
• Information concerning industrial, commercial, or scientific experience
  

Example:

An Indian company pays licence fees to a Singapore software company. India may tax the payment, but under the treaty, the withholding tax is capped at 15%, provided the Singapore company qualifies for treaty benefits. The same income may also be taxable in Singapore, with relief available under Singapore tax rules.

Fees for technical services

Under the treaty, fees for technical services paid from one country to a resident of the other may be taxed in both countries. However, the source country’s withholding tax is capped depending on the nature of the services.

• 15% applies to most fees for technical services, including managerial, technical, or consultancy services that meet the treaty’s definition
  
• 10% applies only where the technical services are ancillary and subsidiary to the use of industrial, commercial, or scientific equipment, and are directly connected to equipment royalties that themselves qualify for the 10% rate
  

For treaty purposes, fees for technical services generally refer to services that make available technical knowledge, experience, skill, know-how, or processes, enabling the recipient to apply the technology independently, or that involve the development and transfer of a technical plan or design.

The reduced rates may not apply if the services are effectively connected to a permanent establishment in the source country or if the fees exceed an arm’s-length amount.

Correctly distinguishing between royalties and fees for technical services is critical, as misclassification can result in higher withholding taxes or denial of treaty benefits.

Example:

A Singapore company leases specialised machinery to an Indian company and also provides the technical support necessary to operate that machinery. If the support services are directly tied to the equipment use, the service fees may qualify for the 10% cap. By contrast, standalone consulting or advisory services would generally be subject to the 15% cap, provided treaty conditions are met.

Permanent establishment rules

Whether your business creates a permanent establishment (PE) in the other country determines where business profits get taxed. The India-Singapore DTAA defines a PE as a fixed place of business through which business activities are wholly or partly carried out.

Common examples include:

• Place of management where key business decisions are made.
  
• Branch office that conducts regular business operations.
  
• Factory or workshop where goods are manufactured or processed.
  
• Mine, oil well, or quarry for extracting natural resources.
  
• Construction site lasting more than 6 months in duration.
  

However, certain activities are specifically excluded from creating a PE:

• Using facilities solely for the storage or display of goods without any sales activity.
  
• Maintaining a stock of goods for processing by another enterprise as an intermediary.
  
• Maintaining a fixed place solely for purchasing goods or collecting market information.
  
• Preparatory or auxiliary activities that support main business operations without generating direct revenue.
  

If you don't have a PE in the other country, your business profits are typically taxed only in your country of residence. This becomes crucial for solopreneurs and service-based businesses operating remotely across borders.

In addition to fixed place permanent establishments, prolonged or repeated service activities in the other country may also create a taxable presence, even without maintaining an office or branch. On-site consulting, technical support, or implementation work carried out over an extended period can trigger permanent establishment exposure and subject related profits to local taxation.

Business profits and source rules

Under the India-Singapore tax treaty, business profits are taxed in the country where the enterprise is resident, unless it carries on business in the other country through a PE. If a PE exists, only the profits attributable to that PE can be taxed in the source country.

This source-based taxation principle means:

• A Singapore company providing services to Indian clients without a PE in India isn't subject to Indian tax on those profits.
  
• An Indian company with a branch office in Singapore pays Singapore tax only on profits connected to that branch operation.
  

The treaty ensures that the contracting parties allocate taxing rights fairly based on where value is actually created, rather than simply where customers are located.

Capital gains and investment structures

Capital gains under the Singapore–India tax treaty are taxed based on the nature of the asset and where the underlying value is located, rather than solely on the seller’s country of residence.

Key provisions include:

• Shares in companies: Gains from the sale of shares are not always taxable only in the seller’s country of residence. Following amendments effective from 1 April 2017, India retains taxing rights over capital gains arising from the sale of shares in Indian companies, subject to grandfathering provisions for investments made before that date and the satisfaction of Limitation of Benefits conditions. Whether capital gains tax ultimately applies depends on when the investment was made and how domestic tax rules interact with the treaty.
  
• Immovable property: Gains from selling real estate may be taxed in the country where the property is located, regardless of the seller’s country of residence.
  
• Business assets: Gains from selling assets that form part of a permanent establishment may be taxed in the country where that permanent establishment is situated.
  

In practice, this framework allows taxing rights to follow where value is created, while still offering potential planning opportunities for investors and holding companies when structured carefully and in line with domestic tax rules.

Employment income and secondments

For individuals working across borders, the DTAA provides clarity on where employment income gets taxed:

• General rule: Salaries are taxable in the country where the employment is exercised.
  
• 183-day rule: However, if you work in the other country for less than 183 days in a 12-month period, and your employer isn't resident in that country, and the remuneration isn't borne by a PE in that country, you're only taxed in your country of residence.
  

For startups with remote teams or employees on short-term assignments, this rule prevents double taxation whilst ensuring tax is paid where work is actually performed.

Relief from double taxation

Even with treaty protections, situations arise where income may be taxed in both countries. The avoidance of double taxation mechanisms addresses this.

Foreign tax credit (Singapore perspective)

Singapore residents can claim a foreign tax credit for taxes paid in India on India-sourced income. However, Singapore follows a territorial tax system with exemptions for certain foreign income, so the practical benefit depends on whether the income is taxable in Singapore.

For income that is taxable in Singapore, the tax credit is limited to the lower of:

• Tax paid in India on that specific income.
  
• Singapore tax attributable to that same income.
  

Foreign tax credit (India perspective)

India allows residents a deduction from Indian tax equal to the Singapore tax paid on income that may be taxed in Singapore under the treaty. For dividends, if an Indian company holds at least 25% of the Singapore company, the credit also accounts for Singapore tax paid on the profits from which dividends are distributed.

Practical limitations

The tax credit mechanism doesn't always provide complete relief. If one country's tax rate significantly exceeds the other's, some residual tax liability may remain. Additionally, claiming credits requires proper documentation and timely filing.

Anti-avoidance and compliance considerations

Recent amendments to the India-Singapore DTAA have introduced anti-abuse provisions to prevent treaty shopping and ensure treaties benefit genuine cross-border operations.

• Principal Purpose Test (PPT): Transactions arranged primarily to gain treaty benefits may be denied those benefits. However, grandfathering provisions protect investments made before specific dates.
  
• Limitation of Benefits (LOB): Shell companies with negligible business operations cannot claim treaty benefits, even if technically resident in a treaty country.
  
• Substance requirements: To claim benefits, entities must demonstrate real business substance in their country of residence, actual operations, employees, and decision-making.
  

Certain investments made before specific amendment dates may continue to benefit from grandfathering provisions, provided the structure satisfies the treaty’s Limitation of Benefits requirements.

For businesses operating legitimately across both jurisdictions, these rules create minimal friction. They primarily target artificial arrangements designed solely for tax avoidance.

Common mistakes businesses make

Understanding the treaty is one thing; implementing it correctly is another. Here are frequent errors that cost businesses money:

• Failing to obtain proper documentation: Not securing a Tax Residency Certificate or completing Form 10F before payments means missing out on reduced withholding tax rates.
  
• Assuming automatic benefits: Treaty benefits aren't automatic. You must proactively claim them and provide required documentation to payers.
  
• Ignoring PE thresholds: Exceeding 183 days on a construction project or establishing office presence without considering PE implications can trigger unexpected tax obligations.
  
• Misclassifying income: Incorrectly categorising income (for example, treating royalties as business income) can result in higher withholding taxes.
  
• Not tracking days: For individuals, failing to track physical presence across both countries can lead to unexpected residency determinations.
  

The key is treating tax compliance as part of your operational planning, not an afterthought.

How the treaty impacts cash flow and treasury operations

For finance teams at mid-size companies managing international operations, the treaty has direct cash flow implications:

• Reduced withholding improves liquidity: Lower withholding rates mean less money tied up in tax payments upfront, directly improving working capital.
  
• Predictable tax costs: Treaty-based withholding tax limits can improve predictability of after-tax returns, although actual outcomes depend on documentation, eligibility, and domestic tax treatment in each jurisdiction.
  
• Simplified repatriation: Clear rules on dividend taxation make profit repatriation more efficient, particularly for Singapore holding companies with Indian subsidiaries.
  
• FX and timing considerations: Because relief often requires filing claims and obtaining refunds, timing cash flows around tax years and ensuring proper documentation becomes part of strategic treasury management.
  

Building these considerations into your financial planning from day one prevents surprises and optimises your effective tax rate.

Can fintech solutions help manage Singapore-India tax complexity?

Understanding the Singapore-India tax treaty is one thing; managing the daily financial operations that determine your tax obligations is another. For solopreneurs, startups, and SMEs operating between Singapore and India, staying compliant means tracking every transaction, categorising income correctly, and maintaining documentation across multiple jurisdictions.

Modern financial platforms like Aspire provide the financial infrastructure that makes treaty compliance manageable:

• Multi-currency accounts for clear income tracking: Hold and transact in SGD and other major currencies from a single platform, making it straightforward to separate foreign income by source country, essential for calculating foreign tax credits and reporting accurately.
  
• Real-time visibility across borders: Track spending and income flows instantly across both markets. Monitor transaction patterns that might trigger permanent establishment concerns before they become compliance issues.
  
• Automated categorisation and reporting: Categorise payments as business profits, dividends, interest, or royalties automatically. Generate reports that separate domestic and foreign income, giving you audit-ready records for tax filing in both countries.
  
• Corporate cards with built-in controls: Issue cards to team members in either market with spending limits by country, reducing the complexity of tracking which expenses relate to which jurisdiction, critical for proper profit attribution.
  
• Document storage and compliance tools: Store residency certificates, treaty relief forms, and transaction documentation in one secure location. When tax authorities request proof of tax residency or treaty eligibility, everything you need is organised and accessible.
  

For businesses navigating the Singapore-India tax treaty, Aspire removes financial friction so you can focus on growth rather than administrative complexity. We've built our platform specifically for founders who think beyond borders.

Ready to simplify your cross-border finances? Open a business account in minutes and get the tools you need to charter the Singapore-India territory with confidence.

Conclusion

The Singapore-India DTA provides real advantages for businesses and individuals operating across these two dynamic economies. From reduced withholding taxes to clearer rules on where income gets taxed, the treaty removes friction that would otherwise make cross-border operations unnecessarily complex.

The key is understanding which provisions apply to your specific situation, obtaining proper documentation, and building tax compliance into your operational workflow rather than treating it as an annual scramble.

For founders building globally from day one, getting this right means keeping more of what you earn and spending less time worrying about tax complexity.

Frequently asked questions

Is there a double tax treaty between India and Singapore?

Yes, the Double Taxation Avoidance Agreement between India and Singapore has been in force since 1994 and applies to residents of one or both contracting states.

Is Singapore a tax-free country for Indians?

Singapore isn't entirely tax-free, but it offers a territorial tax system with no capital gains tax and no dividend tax for most recipients. Indian residents in Singapore still need to comply with the tax laws in both countries.

What is the treaty between Singapore and India?

It's a bilateral agreement that prevents double taxation, reduces withholding tax rates, allocates taxing rights between both countries, and facilitates information exchange for tax purposes.

Is foreign dividend income taxable in Singapore?

Generally, foreign dividends are exempt in Singapore under the foreign income exemption scheme, though specific conditions apply.

What is the DTAA agreement between Singapore and India?

The DTAA is a comprehensive tax avoidance agreement covering income tax, establishing which country can tax various income types and at what rates.

Who is eligible for DTAA?

Any person (individual or entity) who is a resident of India or Singapore under their respective domestic tax law provisions.

Which country is 100% tax free?

No country mentioned in this agreement is completely tax-free, though several jurisdictions have zero income tax. Singapore and India both impose taxes, albeit with different structures.

Is Singapore 0% tax?

No. Singapore has progressive income tax for individuals and a 17% corporate tax rate. However, it doesn't tax capital gains or impose GST on certain transactions.

Is there a double taxation agreement with India?

India has double taxation agreements with around 100 countries, including Singapore, covering various forms of income to prevent tax being paid twice.

What is Article 24A of India Singapore treaty?

Article 24A relates to information exchange provisions that enable tax authorities in both countries to share taxpayer information to prevent tax evasion.

What is 1% and 2% withholding tax?

References to 1% or 2% withholding tax rates arise from specific provisions in domestic tax law rather than the India–Singapore tax treaty. In most cross-border situations covered by the treaty, the applicable withholding tax outcome is determined by treaty caps, eligibility conditions, and domestic compliance requirements rather than these standalone domestic rates.

How to claim DTAA benefit in ITR?

File Form 67 along with your Indian Income Tax Return, providing details of foreign tax paid and claiming credit. You'll need supporting documents like your Tax Residency Certificate and proof of foreign tax payment.