Understanding DTAA

Ratin Biswass / 15 May 2025/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund

I found the story on mutual funds for NRIs very informative

I found the story on mutual funds for NRIs very informative. However, I didn’t quite understand one part related to the India-Singapore tax agreement. Could you please explain it further? - Hitesh Oswal [EasyDNNnews:PaidContentStart]

Editor Responds : The part you’re referring to - 'the IndiaSingapore tax agreement’ is officially called the India-Singapore Double Taxation Avoidance Agreement (DTAA). It is a treaty designed to ensure that income earned by a resident of one country is not taxed twice—in both India and Singapore. For NRIs based in Singapore investing in Indian mutual funds, this agreement plays a crucial role in improving tax efficiency. It determines where certain types of income—such as capital gains, dividends, and interest—are taxable, often offering reduced tax rates or complete exemptions. For instance, capital gains from the sale of Indian securities may be taxed only in India, depending on residency status and specific conditions. The agreement also includes a Limitation of Benefits (LoB) clause to prevent misuse by shell entities. Overall, the DTAA encourages genuine investment between the two countries by providing clarity, reducing tax burdens, and ensuring fair treatment for investors.

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