India–Singapore tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	15 per cent of the gross amount in all other cases — Art. 10(2)(b)	The beneficial owner must be a company which owns at least 25 per cent of the shares of the company paying the dividends (Art. 10(2)(a)). Note the test is 'shares', not voting power or capital, and the…	Article 10, paragraph 2
Interest	15 per cent of the gross amount in all other cases — Art. 11(2)(b); 10 per cent where the interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution (including an insurance company) — Art. 11(2)(a)	There is no government or central-bank exemption inside Article 11. Article 11 has only the two rates in para 2. The exemption a practitioner is looking for lives in a different article. Article 22 (Income of…	Article 11 (rates); 22 (government exemption), paragraph 11(2)(a) and (b); 22(1)-(3)
Royalties	10 per cent of the gross amount — a single flat ceiling with no split between intangible royalties and equipment royalties, and no first-five-years step-down. Art. 12(2) as substituted by Art. 4 of the 2005 Protocol with effect from 1 August 2005.	This is structurally simpler than the USA and UK articles, which each carry two or three different rates keyed to the limb of the definition. Here the limb matters only for taxability, never for rate…	Article 12, paragraph 2
Fees for technical services	10 per cent of the gross amount — the same single ceiling as royalties, Art. 12(2).	Art. 12(4) defines 'fees for technical services' as payments for services of a managerial, technical or consultancy nature (including provision of such services through technical or other personnel) if the…	Article 12, paragraph 4 (make-available at 4(b); enablement rider also on 4(c)); exclusions at 5

Status

In force	27 May 1994 (Agreement signed in India 24 January 1994; entered into force on the later notification). It terminated and replaced the earlier India-Singapore agreement signed at Singapore on 20 April 1981 (Art. 30(2)). Protocol dates: First Protocol signed 29 June 2005, in force 1 August 2005. Second Protocol signed 24 June 2011, in force 1 September 2011 but applied retrospectively to taxable periods falling after 1 January 2008 (FY 2008-09 onwards). Third Protocol signed at New Delhi 30 December 2016, entered into force 27 February 2017, with the Art. 13 and Art. 24A amendments taking effect from 1 April 2017. MLI in force 1 October 2019 for India and 1 April 2019 for Singapore.
Given effect by	G.S.R. 610(E), dated 8-8-1994, under s.90 of the Income-tax Act 1961.
Modified by the MLI	Yes — a synthesised text exists. Prepared on the basis of India's MLI position deposited on ratification 25 June 2019 and Singapore's deposited 21 December 2018. The document states it covers the Agreement signed 24 January 1994 as amended by the Protocols of 29 June 2005, 24 June 2011 and 30 December 2016. No separate publication date is printed. The document expressly states it 'does not constitute a source of law' and that the authentic texts of the Agreement and the MLI take precedence.
Principal purpose test	Present, and it sits alongside Article 24A rather than replacing it. MLI Art. 7(1) is introduced in the synthesised text with the words 'The following paragraph 1 of Article 7 of the MLI applies to the provisions of this Agreement', placed after Article 29. It denies a benefit in respect of an item of income or capital where it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in it, unless granting the benefit would be in accordance with the object and purpose of the relevant provisions. Effective in India for withholding taxes from 1 April 2020 and for other taxes for periods beginning on or after 1 April 2020.

Dividends

Rate	15 per cent of the gross amount in all other cases — Art. 10(2)(b)
Lower rate on a qualifying holding	10 per cent of the gross amount
The holding that unlocks it	The beneficial owner must be a company which owns at least 25 per cent of the shares of the company paying the dividends (Art. 10(2)(a)). Note the test is 'shares', not voting power or capital, and the threshold is 25 per cent — higher than the 10 per cent voting-stock test in the USA treaty.
Where this comes from	Article 10, paragraph 2

Art. 10(3) adds a one-way Singapore-side exemption: for as long as Singapore does not impose a tax on dividends in addition to the tax chargeable on the company's profits or income, dividends paid by a Singapore-resident company to an Indian resident are exempt from any such additional Singapore tax. Art. 10(7)(b)(ii) contains an unusual sourcing rule: dividends paid by a malaysian-resident company out of profits arising in Singapore, and qualifying as Singapore-arising dividends under Art. VII of the 1968 Singapore-Malaysia agreement, are deemed to arise in Singapore. Art. 10(5) disapplies paras 1 and 2 where the holding is effectively connected with a PE or fixed base.

Interest

Rate	15 per cent of the gross amount in all other cases — Art. 11(2)(b); 10 per cent where the interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution (including an insurance company) — Art. 11(2)(a)
Exemptions	There is no government or central-bank exemption inside Article 11. Article 11 has only the two rates in para 2. The exemption a practitioner is looking for lives in a different article. Article 22 (Income of Government) is the operative exemption: the Government of a Contracting State is exempt from tax in the other State on income derived from sources in that other State, and Art. 22(2) expressly extends this to (a) dividends under Art. 10, (b) interest under Art. 11, and (c) any other income or gains derived from transactions not pursuant to the conduct of commercial activities. Art. 22(3) defines 'Government' for Singapore as the Government of Singapore including the Monetary Authority of Singapore, the Board of Commissioners of Currency, the Government of Singapore Investment Corporation Pvt. Ltd. To the extent IT is not engaged in the conduct of commercial activities, a statutory body not engaged in the conduct of commercial activities, and any other institution or body the competent authorities may agree from time to time. For India it means the Government of India including the Governments of the States and Union Territories, the Reserve Bank of India or any of its subsidiaries which is not engaged in the conduct of commercial activities, a statutory body not so engaged, and any other agreed institution or body.
Where this comes from	Article 11 (rates); 22 (government exemption), paragraph 11(2)(a) and (b); 22(1)-(3)

The commercial-activities qualifier is the whole answer in most disputes about this exemption. Gic, the rbi's subsidiaries and statutory bodies are covered only so far as they are not conducting commercial activities. Art. 11(5) treats interest as arising in a State where the payer is that State, a political sub-division, a local authority, A statutory body, or a resident — the statutory-body limb is not in the USA or UK equivalents. Penalty charges for late payment are excluded from 'interest' (Art. 11(3)). Art. 11(4) disapplies paras 1 and 2 where the debt-claim is effectively connected with a PE or fixed base.

Royalties

Rate	10 per cent of the gross amount — a single flat ceiling with no split between intangible royalties and equipment royalties, and no first-five-years step-down. Art. 12(2) as substituted by Art. 4 of the 2005 Protocol with effect from 1 August 2005.
Where this comes from	Article 12, paragraph 2

This is structurally simpler than the USA and UK articles, which each carry two or three different rates keyed to the limb of the definition. Here the limb matters only for taxability, never for rate. Equipment royalties under Art. 12(3)(b) exclude payments derived by an enterprise from activities described in Art. 8(4)(b) or 8(4)(c) (shipping/air transport ancillary activities). Art. 12(3)(a) expressly includes gains derived from the alienation of any such right, property or information within 'royalties'.

Fees for technical services

Rate	10 per cent of the gross amount — the same single ceiling as royalties, Art. 12(2).
Make-available requirement	Yes
Where this comes from	Article 12, paragraph 4 (make-available at 4(b); enablement rider also on 4(c)); exclusions at 5

Art. 12(4) defines 'fees for technical services' as payments for services of a managerial, technical or consultancy nature (including provision of such services through technical or other personnel) if the services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a paragraph-3 payment is received; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. An unnumbered sentence then deems 'the person acquiring the service' in (b) and (c) to include an agent, nominee or transferee of that person. Art. 12(5) excludes seven categories notwithstanding para 4: (a) services ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property other than a sale described in 3(a); (b) services ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; (c) teaching in or by educational institutions; (d) services for the personal use of the individual or individuals making the payment; (e) payments to an employee of the payer, or to any individual or firm of individuals (other than a company) for professional services as defined in Art. 14; (f) services rendered in connection with an installation or structure used for the exploration or exploitation of natural resources referred to in Art. 5(2)(j); and (g) services referred to in Art. 5(4) and 5(5) — i.e. Construction supervision and mineral-oil services, which are dealt with as PE, not FTS.

Capital gains on shares

Treatment	Three-tier regime turning on the date the shares were acquired, inserted by the Third Protocol with effect from 1 April 2017. Art. 13(4A): gains from the alienation of shares acquired before 1 april 2017 in a company resident in a Contracting State are taxable only in the State of which the alienator is a resident — full residence-State taxation, grandfathered without any end date. Art. 13(4B): gains from the alienation of shares acquired on or after 1 april 2017 may be taxed in the State of which the company is resident — i.e. Source taxation is restored. Art. 13(4C): a transitional half-rate window — gains within 4B arising during the period beginning 1 April 2017 and ending 31 March 2019 may be taxed in the company's State of residence at a rate not exceeding 50 per cent of the tax rate applicable on such gains in that State. Old Art. 13(4) (the blanket residence-only rule for gains on any property) was deleted. Art. 13(5) is the residual: gains on any property other than that referred to in paras 1, 2, 3, 4A and 4B are taxable only in the alienator's State of residence — note the residual expressly cross-refers to 4A and 4B but not to 4C.
Grandfathering	Art. 13(4A) — shares acquired before 1 April 2017. The test is the date of acquisition of the shares, not the date of the gain and not the date of the investment vehicle's incorporation. The grandfathering has no sunset: a pre-1 April 2017 share sold today is still within 4A, provided Art. 24A is satisfied. The Art. 13(4C) 50 per cent concessional window, by contrast, ran only from 1 April 2017 to 31 March 2019 and is spent.
Conditions	Article 24A, inserted by the Third Protocol with effect from 1 April 2017, is a condition on both Art. 13(4A) and Art. 13(4C) — and on nothing else. Four limbs: (1) a resident is not entitled to 4A or 4C benefits if its affairs were arranged with the primary purpose to take advantage of those benefits. (2) A shell or conduit company claiming residence is not entitled to 4A or 4C benefits; a shell or conduit company is any legal entity within the definition of resident with negligible or nil business operations or with no real and continuous business activities carried out in that State. (3) A deeming rule: a resident is deemed to be a shell or conduit company if its annual expenditure on operations in that State is less than S$200,000 in Singapore or Indian Rs 50,00,000 in India — measured, for Art. 13(4A), for each of the 12-month periods in the immediately preceding period of 24 months from the date the gains arise; and, for Art. 13(4C), for the immediately preceding 12 months from that date. (4) A reverse deeming (safe harbour): a resident is deemed not to be a shell or conduit company if either (a) it is listed on a recognised stock exchange of that State, or (b) it meets the same expenditure figures over the same periods. Art. 24A(5) defines 'recognised stock exchange' as, for Singapore, the securities market operated by Singapore Exchange Limited, Singapore Exchange Securities Trading Limited and The Central Depository (Pte) Limited; and for India, a stock exchange recognised by sebi. An explanation closes the article: 'The cases of legal entities not having bona fide business activities shall be covered by paragraph 1 of this Article.'
Where this comes from	Article 13 (gains); 24A (limitation), paragraph 13(4A), 13(4B), 13(4C), 13(5); 24A(1)-(5) and Explanation

Permanent establishment

Construction or installation PE	More than 183 days in any fiscal year for a building site or construction, installation or assembly project (Art. 5(3)) — and, separately, more than 183 days in any fiscal year for supervisory activities in connection with such a site or project (Art. 5(4), a distinct deeming provision, not a sub-clause of 5(3)). A third deeming rule, Art. 5(5), applies notwithstanding paras 3 and 4: providing services or facilities for more than 183 days in any fiscal year in connection with the exploration, exploitation or extraction of mineral oils creates a PE. Note the measuring period is the fiscal year, not any twelve-month period — a project straddling two fiscal years may fail the test in each year while exceeding 183 days overall.
Service PE	More than 90 days in any fiscal year for the furnishing of services through employees or other personnel (Art. 5(6)(a)) — reduced to more than 30 days in any fiscal year where the activities are performed for a related enterprise within the meaning of Art. 9 (Art. 5(6)(b)). Services falling within Art. 5(4) or 5(5), and technical services as defined in Art. 12, are excluded from the service PE limb.
Agency PE	True
Where this comes from	Article 5

Art. 5(2)(j) gives a 120-day (in any fiscal year) threshold for an installation or structure used for the exploration or exploitation of natural resources. Art. 5(7) carries the usual preparatory/auxiliary exclusions but with a treaty-level anti-fragmentation rule already built in: sub-paragraphs (a) to (e) 'shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State through which the business of the enterprise is wholly or partly carried on'. Agency PE at Art. 5(8) has the standard three limbs — authority to conclude contracts (unless limited to purchasing), stock-and-delivery, and habitually securing orders wholly or almost wholly for the enterprise or its commonly controlled group. Art. 5(9) removes independent-agent status where activities are devoted wholly or almost wholly to the enterprise or its common-control group.

Anti-abuse: limitation of benefits, and the MLI

LOB	Two distinct provisions, aimed at different things. (a) article 24 (Limitation of Relief) is a remittance-basis rule, not an anti-treaty-shopping rule: where the Agreement exempts or reduces tax on source-State income and the residence State taxes that income only by reference to the amount remitted to or received in that State, the source-State relief applies only to so much of the income as is remitted or received there. Art. 24(2) disapplies this for income derived by the Government of a Contracting State or any person approved by that State's competent authority, 'Government' including its agencies and statutory bodies. (b) article 24A is the shell/conduit limitation, and it bites only on Art. 13(4A) and Art. 13(4C) — see capital_gains_shares.conditions for its full terms. It does not limit dividends, interest, royalties or FTS. (c) article 28A (Miscellaneous), added by the Third Protocol: 'This Agreement shall not prevent a Contracting State from applying its domestic law and measures concerning the prevention of tax avoidance or tax evasion' — an express reservation of domestic GAAR.
PPT	Present, and it sits alongside Article 24A rather than replacing it. MLI Art. 7(1) is introduced in the synthesised text with the words 'The following paragraph 1 of Article 7 of the MLI applies to the provisions of this Agreement', placed after Article 29. It denies a benefit in respect of an item of income or capital where it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in it, unless granting the benefit would be in accordance with the object and purpose of the relevant provisions. Effective in India for withholding taxes from 1 April 2020 and for other taxes for periods beginning on or after 1 April 2020.
Subject to tax	No subject-to-tax clause. Art. 4(1) is unusually thin: 'resident of a Contracting State' means simply any person who is a resident of that State in accordance with its taxation laws — with none of the 'liable to tax by reason of domicile, residence...' machinery of the OECD Model and none of the source-income exclusion found in the UK Art. 4(1)(a). Art. 4(3) retains the place-of-effective-management tie-breaker for non-individuals; the MLI did not replace it here.
Where this comes from	Article 24; 24A; 28A; and MLI Art. 7(1)

Sparse — only two MLI boxes appear in the whole document. (1) MLI Art. 6(1): the anti-treaty-shopping preamble is inserted into the preamble. (2) MLI Art. 7(1): the principal purposes test, placed after Article 29. Critically, the box is introduced with the words 'The following paragraph 1 of Article 7 of the MLI applies to the provisions of this Agreement' — it does not replace any existing article. Article 24A therefore survives intact and the PPT sits on top of it. Contrast the UK, where MLI Art. 7(1) replaces Art. 28C. Nothing else was modified: Articles 4, 5, 10, 11, 12 and 13 read identically in the synthesised text and in the Comprehensive Agreement, so the MLI changed neither the residence tie-breaker, nor the PE thresholds, nor the anti-fragmentation position, nor — importantly — Article 13. MLI effect dates: in India, withholding taxes where the triggering event occurs on or after 1 April 2020 and other taxes for taxable periods beginning on or after 1 April 2020; in Singapore, withholding taxes from 1 January 2020 and other taxes for taxable periods beginning on or after 1 April 2020.

The protocols, in order

A treaty read without its protocols is a wrong answer.

Notification No. S.O. 1022(E), dated 18-7-2005 — First Protocol (signed 29 June 2005, in force 1 August 2005). Its Art. 4 replaced Art. 12(2), setting a single 10 per cent ceiling for royalties and fees for technical services. Its Arts. 1, 2, 3, 5 and 6 have since all been deleted (Art. 2 by the Second Protocol; Arts. 1, 3, 5 and 6 by Art. 4 of the Third Protocol with effect from 1 April 2017), so of the 2005 Protocol only the Art. 12(2) rate change and the entry-into-force article survive.
Notification No. S.O. 2031(E), dated 1-9-2011 — Second Protocol (signed 24 June 2011, in force 1 September 2011). Replaced Art. 28 (Exchange of Information) with the OECD 2005-standard version and deleted Art. 2 of the 2005 Protocol. Applied to taxable periods beginning on or after 1 January of the three calendar years immediately preceding the year of entry into force, hence FY 2008-09 onwards.
Notification No. S.O. 935(E), dated 23-3-2017 — Third Protocol (signed 30 December 2016, in force 27 February 2017). This is the one that matters: it inserted Art. 9(2) (corresponding adjustment), deleted Art. 13(4) and inserted Arts. 13(4A), 13(4B) and 13(4C) with effect from 1 April 2017, inserted Art. 24A (the shell/conduit limitation on the Art. 13 grandfathering) with effect from 1 April 2017, deleted Arts. 1, 3, 5 and 6 of the 2005 Protocol with effect from 1 April 2017, and added Art. 28A (Miscellaneous) preserving each State's domestic anti-avoidance law. Art. 6 of the Third Protocol contains a fallback: if the notifications were still pending at 31 March 2017, the Protocol would enter into force on 1 April 2017 regardless.
The MLI (signed by both States 7 June 2017) modifies the Agreement; see synthesised_text.

The words themselves

Quoted from the treaty as notified.

Gains from the alienation of shares acquired before 1 April 2017 in a company which is a resident of a Contracting State shall be taxable only in the Contracting State in which the alienator is a resident.

Article 13, paragraph 4A of the treaty as notified.

However, the gains referred to in paragraph 4B of this Article which arise during the period beginning on 1 April 2017 and ending on 31 March 2019 may be taxed in the State of which the company whose shares are being alienated is a resident at a tax rate that shall not exceed 50% of the tax rate applicable on such gains in that State.

Article 13, paragraph 4C of the treaty as notified.

A shell or conduit company is any legal entity falling within the definition of resident with negligible or nil business operations or with no real and continuous business activities carried out in that Contracting State.

Article 24A, paragraph 2 of the treaty as notified.

A resident of a Contracting State is deemed to be a shell or conduit company if its annual expenditure on operations in that Contracting State is less than S$ 200,000 in Singapore or Indian Rs. 5,000,000 in India, as the case may be: (a) in the case of paragraph 4A of Article 13 of this Agreement, for each of the 12 month periods in the immediately preceding period of 24 months from the date on which the gains arise;

Article 24A, paragraph 3 of the treaty as notified.

The cases of legal entities not having bona fide business activities shall be covered by paragraph 1 of this Article.

Article 24A, paragraph Explanation of the treaty as notified.

make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein

Article 12, paragraph 4(b) of the treaty as notified.

consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein.

Article 12, paragraph 4(c) of the treaty as notified.

This Agreement shall not prevent a Contracting State from applying its domestic law and measures concerning the prevention of tax avoidance or tax evasion.

Article 28A, paragraph whole article of the treaty as notified.

What to watch

The grandfathering test in Art. 13(4A) is the date the shares were acquired, not the date of sale and not the date the Singapore holding company was set up. Shares acquired on 31 March 2017 are grandfathered indefinitely; shares acquired on 1 April 2017 never were.
Article 24A is a condition on the grandfathering itself, not a separate general LOB. A pre-April-2017 shareholding held by a company that fails the expenditure test loses Art. 13(4A) altogether and the gain becomes taxable in India.
The Art. 24A(3)(a) expenditure test for the 4A grandfathering is measured over each of the two 12-month periods in the preceding 24 months — both must be cleared. Testing only the last 12 months (the 4C measure) understates the requirement for a 4A claim. This is precisely the kind of two-limb test that gets truncated after limb one.
The Art. 24A(4) safe harbour is a deeming provision in the taxpayer's favour: listing on a recognised exchange, or meeting the expenditure figures, means the entity is deemed not to be a shell or conduit. But it deems away only paras 2 and 3; the primary-purpose test in Art. 24A(1) still applies, and the Explanation confirms that entities without bona fide business activities fall into para 1.
The Art. 13(4C) 50 per cent concession applied only to gains arising between 1 April 2017 and 31 March 2019. It is spent. Any current computation on post-April-2017 shares uses the full Indian rate.
Article 11 contains no government or central bank exemption. The exemption is in article 22 (Income of Government), and it is qualified throughout by 'not engaged in the conduct of commercial activities'. Looking only at Article 11 produces the wrong answer.
The Singapore make-available limb is drafted more tightly than the USA or UK versions. Art. 12(4)(b) adds 'which enables the person acquiring the services to apply the technology contained therein', and Art. 12(4)(c) — the technical plan/design limb, which in the USA and UK treaties is free-standing — carries its own exclusion for any service that does not enable the recipient to apply the technology. So in the Singapore treaty the enablement requirement reaches both limbs (b) and (c).
Art. 12(5) has seven exclusions, two more than the USA and UK articles: (f) natural-resource installation services under Art. 5(2)(j) and (g) services within Art. 5(4) and 5(5). Those are routed to the PE articles instead of being taxed as FTS.
PE time thresholds here are measured in fiscal years, not rolling twelve-month periods. The 183-day construction test and both service PE tests (90 days / 30 days for related enterprises) all reset at the fiscal year boundary — a materially different result from the USA and UK treaties on the same facts.
Article 5(7) already contains an anti-fragmentation proviso of its own, which is why the MLI's Art. 13(4) was not needed here.
The dividend threshold is 25 per cent of the shares, not 10 per cent of voting stock. It is one of the higher participation thresholds in India's network.
The PPT applies in addition to Article 24A and Article 28A. A grandfathered Art. 13(4A) claim must now survive three separate anti-abuse gates: Art. 24A, the MLI PPT, and domestic GAAR expressly preserved by Art. 28A.

What this page does not tell you. Article 25 (Avoidance of Double Taxation), including the tax-sparing style deemed-credit list in Art. 25(5) that cross-refers to sections 10(4), 10(4B), 10(5B), 10(15)(iv), 10A, 10B, 33AB, 80-I and 80-ia, was seen only in passing on screen and not read in full. Articles 26 (Non-Discrimination), 27 (map) and 28 (Exchange of Information as replaced in 2011) were not read line by line. Whether MLI Part VI arbitration applies is not established. The full text of the deleted Arts. 1, 2, 3, 5 and 6 of the 2005 Protocol is shown only as '[***]', so what those articles originally did is not recoverable from the sources used here. The Gazette page references for G.S.R. 610(E) and the three amending notifications are not printed, only numbers and dates. No most-favoured-nation clause was found anywhere in the Agreement or in the three Protocols, all of which were read.

The India–Singapore tax treaty