Investors and Private Equity Associations Are Concerned About India-Singapore Tax Treaty

Foreign portfolio investors and private equity associations are concerned about the India-Singapore tax treaty, which is expected to be signed later this year. In the last month, the associations have written to the government requesting several changes on the tax treaty.

Tax Treaty To Be Similar to European Countries

Associations such as Asia Securities Industry & Financial Markets Association (ASIFMA), Capital Markets Development Council (CMDC) and at least one association representing private equity and venture capital funds worry that the government may sign a treaty with Singapore that would be similar to the one treaty signed with Mauritius. Foreign portfolio investors (FPIs) and the Singapore government prefer the treaty to be similar to those with European countries, mainly France and the Netherlands.

Expensive Investments

If the tax treaty would implement similar rules as are in the one with Mauritius, investing in Indian equities via Singapore may become expensive. The FPIs require the Government to establish the treaty in accordance to those with European countries, especially in context of capital gains. They  demand not to levy taxes either for long term capital gains or short-term capital gains if the investor holds less than 10% in the Indian company.

Source: The Economic Times, The Business Times

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