NRI Taxation in India

Disclosure of Foreign Income and Assets

It is not compulsory for an individual to show foreign assets or income in India given that they are Non-Residents. Should the said individual become a resident thereafter, he/she will be liable to show and declare such income and assets.

Double Taxation Avoidance Agreement

A Double Taxation Avoidance Agreement (also known as “DTAA”) was signed between India and Singapore back in 1994. Subsequent protocols were signed on 29 June 2005, 24 June 2011 followed by 30 December 2016, each introducing updates like enhancements to capital gains provisions and improved anti-abuse provisions. As of even date, India has DTAAs with approximately over 94 countries.

By way of background, the DTAA is a bilateral treaty that was primarily executed to prevent taxpayers from being taxed the same income by both countries (i.e. India and Singapore). The said agreement/treaty also (i) promotes economic cooperation between countries, (ii) provides clarity and certainty to taxpayers about their tax liabilities and (iii) enables tax credits, exemptions or reduced tax rates on certain types of income.

DTAA Capital Gains

Pursuant to residual clause 4 of Article 13 of the India-Singapore DTAA, capital gains arising from the sale of shares, units, and mutual funds will be taxable only in the country in which the seller is a resident. This position is supported by the following notable Delhi and Mumbai Tribunal rulings:

i.                Saket Kanoi (UAE) vs DCIT [2024] 168 taxmann.com 418 – Judgment dated 23 Oct 2024;

ii.               DCIT vs K.E. Faizal (UAE) [2019] Indian Kanoon – Judgment dated 8 Jul 2019; and

iii.              Anushka Sanjay Shah (Singapore) vs ITO [2025] Mumbai ITAT – Judgment 26 Mar 2025. 

In addition to the above, please find the following examples in relation to the taxation of capital gains:

a.     Immovable property – if a Singapore Resident sells immovable property in India, India has the right to tax the profit from that sale.

b.     Sale of Shares – if a Singapore Resident sell shares of a company, where the company’s main assets are real estate located in India, India has the right to tax the capital gains. If any other shares belonging to a company based in India, India can also tax the gain from the sale.

c.     Other Assets – if a Singapore Resident sells any other type of property not mentioned above, the gain is taxable only in the country where the seller is a resident.

The aforementioned DTAA provides relief to tax residents of Singapore (NRIs, OCIs, other foreign nationals and even companies/corporate entities) who also have some income in India from sources like dividends, interest or capital gains from mutual funds.

Since Singapore does not tax capital gains for individuals, this means that many Non-Resident Indians (referred to as “NRI”) living in Singapore may end up paying zero tax in both countries on their mutual fund gains – provided they claim this benefit properly.

DTAA benefits for Singapore

Eligibility for exemption of capital gains taxation pursuant to the DTAA

To be eligible to claim capital gains exemption, you must:

i.                Qualify as an NRI under Indian Income Tax Law (typically by spending more than 182 days outside India in the financial year);

ii.               Be a tax resident of Singapore in the same year in which the mutual fund gain arises;

iii.              Have no permanent establishment (such as a business base or office) in India.

Conditions to the available DTAA benefit:

The resident must first obtain Tax Residency Certificate (more commonly known as Certificate of Residence in Singapore – will be referred to as “COR” herein) from Inland Revenue Authority of Singapore (“IRAS”).

The COR can be obtained from IRAS only if the individual primarily resides in Singapore and was physically present in Singapore for at least 183 days for that financial year.  The individual can log into Singpass and complete the application form via IRAS myTax Portal and submit the personal identification documents, proof of physical stay in Singapore, income details followed by contact details.

Thereafter, the resident should fill up the online Form 10F declaration in India’s income tax portal (www.incometax.gov.in), by using their PAN credentials.

Together with the former two documents, the resident is also required to prepare and submit a self-declaration letter that corroborates that the individual is a tax resident of Singapore during the financial year, the individual maintains no permanent establishment in India and the relevant article of the DTAA (in most cases – Article 13).

The relevant DTAA Articles are appended herein for your ease of reference:  

After the submission of the aforesaid ancillary documents, the individual is required to also file the Income Tax Return (referred to as “ITR”). The ITR filing will be deemed mandatory under the following circumstances:

·       Income exceeds Basic Exemption Limit

·       Taxable Capital Gain or Dividend Income

·       Carry forward of Loss up to 8 years

·       Spent over RS. 2 Lakhs (approximately SGD 2,928)

·       Electricity expenses exceeded RS. 1 Lakhs (approximately SGD 1,464)

·       Deposited RS. 1 Crore (approximately SGD 146,400) or more in one or more current bank account

·       Deposited RS. 50 Lakhs (approximately SGD 73,200) or more in one or more saving bank accounts.

The ITR filing, which was previously due on 31 July 2025, has been extended till 15 September 2025 for this calendar year. It is paramount to take note that there can be no revisions made in the ITR filing once submitted and it is not possible to revise the carry forward of loss as well. Penalty and late filing fees will be applicable for late lodgements, and it will typically vary depending on the income of that individual.

Adjustment of Losses

Changes in Income Tax Slab Rates

The proposed new tax regime stipulates that some exemptions and deductions which were allowed in the old tax regime (i.e. namely 80C, 80D, etc) are no longer applicable, pursuant to Section 115BAC.

Tax Deducted at Source (“TDS”)

Capital Gains – Immovable Properties:

LTCL and Negligible Gain