India is likely to chalk out amendments to its existing tax treaty with Singapore, on the lines of those achieved with Mauritius. Speaking at the 13th international tax conference, organised by Assocham, Akhilesh Ranjan, Chief Commissioner of Income Tax (International Taxation) said there may be small variations and some fine tuning but substantially similar to the amendments effected in the India-Mauritius treaty. Elaborating on the issue, Ranjan said that talks are going on and there are some procedures to be followed. Modalities are on. This remark is significant as it indicates that India would strive for attaining the taxing right on sale of shares of an Indian company, by a Singapore-based tax resident.

The existing India-Singapore tax treaty provides for residence-based capital gains taxation, capital gains on sale of shares would be taxable only in the country of residence of the seller, subject to satisfaction of limitation of benefits clause. With India-Mauritius tax treaty amendments notified, all eyes are now on how India-Singapore tax treaty would get reshaped. This is because the amendments in the Mauritius treaty would also result in the withdrawal of capital gains exemption for investors based in Singapore with effect from April 1 next year. At present, investments through Singapore accounts for nearly 16 per cent of foreign direct investment (FDI) (from April 2000 to March 2016) in India, second only to Mauritius.