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Singapore Capital Gains Tax

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October 26, 2021

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5 mins read

Singapore Capital Gains Tax Rate on transfer of shares of an Indian company, need to be evaluated under the provisions of the Income-Tax Act 1961, and the India Singapore Treaty .

Singapore Capital Gains Tax shall depend on the following factors : –

  • Nature of instrument – Equity shares or Compulsorily Convertible Debentures or Compulsorily Convertible Preference shares ;
  • Period of holding of such instruments ;
  • The cost of acquisition of such instruments ;
  • The sale price of such instruments ;
  • The currency in which such instruments were acquired .

Capital gains arising out of sale of equity shares

Capital gains arising out of sale of equity shares of an unlisted Indian company by a non-resident, which are held for less than 24 months, shall be construed as short-term capital gains, and would be liable to tax in India at the rate of 40 % (plus applicable surcharge and cess).

However, where such equity shares are held for more than 24 months, they may be liable to a reduced rate tax (plus applicable surcharge and cess), subject to the fulfilment of conditions prescribed under the IT Act, 1961.

Under the provision of Article 12 (4B) of the India Singapore Tax Treaty, gains from transfer of equity shares of an Indian company, which were acquired on or after 1 April 2017, are also liable to tax in India. In certain cases, where the shares were acquired prior to this date, grandfathering provisions may be applicable, and the capital gains arising thereon, may be exempt from tax. A detailed evaluation of the fact pattern should be done, to ascertain  if such capital gains are liable to tax/ or exempt from tax. In case they are liable to tax, to the rate of tax applicable should be examined.

Singapore Capital Gains Tax on transfer of Compulsorily Convertible Debentures

Singapore Capital Gains Tax on transfer of Compulsorily Convertible Debentures , may be different from the capital gains tax which may arise on sale of equity shares of an Indian company.

In addition to this , one of the other points to be noted is, that the buyer is under an obligation to withhold Tax under Section 195 of Income Tax Act, 1961, where such transfer is liable to tax in India. In case the buyer takes a stand that such capital gains are exempt, it is advisable that they either obtain a lower withholding tax certificate from the income tax office, or, assess the risk associated with such a stand. If ultimately it were to be held, that such gains are taxable in India, while the buyer did not withhold any taxes , the Indian tax office can seek to recover such taxes from the buyer.

International Taxation Services

Singapore  Capital Gains Tax Rate

Under the local laws of Singapore, Singapore Capital Gains Tax Rate is zero (Subject to certain conditions).

If you need any further assistance, in evaluating your specific case, we would be glad to assist you . You can  obtaining a consulting appointment at this link – https://rzp.io/l/r6XlzA9Hjw

For any queries, please write them in the Comment Section or Talk to our tax expert 

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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