India: Capital gain exempt under Singapore treaty (High Court decision)

A High Court decision concerning capital gain on sale of debt instruments under India-Singapore income tax treaty

A High Court decision concerning capital gain on sale of debt instruments

The Bombay High Court held that capital gain on the sale of debt instruments in India was exempt from tax in India under the India-Singapore income tax treaty because such gain was fully taxable in Singapore, regardless of whether it was actually repatriated to Singapore.

The tax authority argued that the gain did not qualify for exemption under the treaty because under the “Limitation of Relief” provision, only income actually repatriated to Singapore is treated as subject to tax in Singapore and thus entitled to relief.

The court rejected the tax authority’s argument, finding that under Singapore law capital gain on the sale of debt instruments is subject to tax by reference to the full amount, whether or not repatriated to Singapore.

The case is: CIT v. Citicorp Investment Bank (Singapore) Ltd.

Read a July 2023 report [PDF 410 KB] prepared by the KPMG member firm in India 


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