There are two ways to benefit from double taxation exemptions: without tax deduction or with a deduction from a reduced rate, as agreed in the double taxation agreement. 3. When a company is established in the two contracting states under paragraph 1, the company is considered outside the scope of this Convention, with the exception of Article 10, paragraph 2 (dividends), Article 26 (non-discrimination), Article 27 (procedure of mutual agreement), Article 28 (exchange of information and assistance) and Article 30 (entry into force). 2. Strengthening tax security, reducing the risk of cross-border taxation The India-Singapore Double Taxation Agreement currently provides for a capital gains-based tax on a company`s shares. The third protocol amends the agreement effective April 1, 2017, which provides for a tax at the source of capital gains from the transfer of shares of a company. This will reduce revenue losses, avoid double non-taxation and streamline investment flows. In order to ensure the safety of investors, equity investments made before April 1, 2017 were processed in accordance with the benefit limitation clause provided by the 2005 Protocol, in accordance with the terms of the benefit limitation clause. In addition, a two-year transitional period was provided between April 1, 2017 and March 31, 2019, during which capital gains on shares in the source country are taxed at half the normal rate, subject to compliance with the terms of the benefit limitation clause. The revised Convention on the Prevention of Double Taxation between India and Cyprus, signed on 18 November 2016, provides for a tax on capital gains from the disposal of shares instead of a home-related tax under the Convention on the Prevention of Double Taxation, signed in 1994. However, a grandfather clause is provided for investments made before April 1, 2017 and for which capital gains continue to be taxed in the country where the taxpayer is based. It also provides assistance between the two countries for the collection of taxes and updates the provisions on the exchange of information to recognized international standards.
The Indian government has agreements with several countries to avoid double taxation (tax treaties), the main objective of which is to develop a system for the countries concerned in order to grant the right to a fair taxation of different types of income. Tax treaties are designed to fully protect taxpayers from double taxation and to prevent discrimination between taxpayers in the international field.