Investment in shares listed in foreign countries by a person resident in India

General

Taxability of dividend received from foreign company

Dividend received from a foreign company is charged to tax under the head "Income from other sources" at slab rate.

Relief from double taxation

Dividend received from a foreign company maybe charged to tax in India as well as in the country to which the foreign company belongs. If the foreign dividend has suffered double taxation, then the taxpayer can claim double taxation relief either as per the provisions of Double Taxation Avoidance Agreement (if any) entered into with that country (if any) by the Government of India or can claim relief as per section 91 (if no such agreement exists).

Expenditure

In the case of dividends, the amount paid as commission or remuneration to a banker or any other person for the purpose of realizing such dividend on behalf of the taxpayer will be allowed as a deduction u/s 57.

Taxability of gains on transfer of shares of foreign company

Long-term (held for more than 24 months) Capital Gain on Foreign Company Shares:

  • In case of unlisted shares/ Foreign company Shares, the long-term capital gain on sale of share is taxable at the rate of 20%.

Short Term Capital Gain (held for less than 24 months) on Foreign Company Shares:

  • In the case of Foreign Company Shares, the short-term capital gain on sale of share is taxable.

The United States of America

ARTICLE 10

Dividends

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
    • 15 per cent of the gross amount of the dividends if the beneficial owner is a company which owns at least 10 per cent of the voting stock of the company paying the dividends.
    • 25 per cent of the gross amount of the dividends in all other cases.

Sub-paragraph (b) and not sub-paragraph (a) shall apply in the case of dividends paid by a United States person which is a Regulated Investment Company.

ARTICLE 13

Gains

Except as provided in Article 8 (Shipping and Air Transport) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law.

Meaning

The terms "a Contracting State" and "the other Contracting State" mean India or the United States as the context requires.

Example: Tax query for capital gains on the sale of foreign company shares: Through my USA based company, I get a certain amount deducted from my monthly salary. For this amount, shares of my company are purchased in USA's stock exchange and put into my brokerage account created by the company with a US-based brokerage firm. In my monthly salary, full tax gets deducted on this amount. I get periodic dividends on these shares in USD. When I sell these shares, I get capital gains. I have the following questions:

  • How will my capital gains be taxed? Is the short-term capital gain and long-term capital gain concept applicable in this scenario?
  • Will the dividend income be taxed? When the dividend is paid, already 25% tax is getting deducted in the US.

Answer: - NOT LISTED IN INDIAN STOCK EXCHANGE (FOREIGN COMPANY SHARES)
Any capital gains arising on sale of such transactions will still be treated as long-term if the shares have been held for 24 months or more on the date of sale. In case the shares are sold within 24 months, the short-term capital gains arising on such transaction shall be included in your regular income and shall be taxed at the slab rate applicable to you.

The tax-rate applicable in case of long-term capital gains is 20%.

Dividend incomes received from the USA are considered under the income tax head "income from other sources." A Tax would be levied based on the tax slab applicable to the particular individual.

Relief From Double Taxation

Though dividend received from foreign companies are taxable in the hands of the individual, if taxes are paid on such dividend in the country where the company is based, the investor may claim relief under double taxation avoidance agreement (DTAA), provided India has such an agreement with that country. If no such agreement exists, an investor can even claim relief under section 91 of the Income-tax Act.

Japan

ARTICLE 10

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.
    The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

ARTICLE 13

  • Unless the provisions of paragraph 2 are applicable, gains derived by a resident of a Contracting State from the alienation of shares of a company which is a resident of the other Contracting State may be taxed in that other Contracting State.
  • Gains derived by a resident of a Contracting State from the alienation of any property other than that referred to in paragraphs 1 to 4 (immovable property, any property- other than immovable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts), shall be taxable only in that Contracting State.

ARTICLE 23

Double taxation shall be avoided in the case of India as follows:

  • If an Indian resident's income is taxed in Japan, India shall allow the Japanese tax paid as a deduction from the tax on the income. Max deduction will be the tax amount attributable to the income that is taxed in Japan. Deduction of Japanese tax shall be first allowed from income-tax payable by the company in India and then from the surtax.
  • Where Indian resident receives an income that is taxable only in Japan, if at all India includes that income in the tax base, it should allow a deduction the amount of Indian tax attributable to such income.

In the case of Japan, it shall be avoided using the same mechanism as commonly used in India. (as given in point a)

Germany

ARTICLE 10

Dividends

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 10 percent of the gross amount of the dividends.
    This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

ARTICLE 13

Capital Gains

  • Gains from the alienation of shares in a company which is a resident of a Contracting State may be taxed in that State.
  • Gains from the alienation of any property other than that referred to in paragraphs 1 to 4 (immovable property, any movable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts) shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 23

Relief From Double Taxation

  • Tax shall be determined in the case of a resident of Germany as follows:
    • Unless foreign tax credit is to be allowed as in (b), there shall be exempted from German tax any item of income arising in India and any item of capital situated within India, which, according to this Agreement, may be taxed in India. Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital so exempted.
    • Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German tax payable in respect of the following items of income arising in the India and the items of capital situated there, the Indian tax paid under the laws of the India and in accordance with this Agreement on:
      • Dividends.
      • Income in the meaning of paragraph 4 of Article 13 (capital gains from the alienation of shares.
  • Tax shall be determined in the case of a resident of India using the common mechanism of tax credit generally used by India.
  • The laws in force in either of the Contracting States shall continue to govern the taxation of income and capital in the respective Contracting States except where express provision to the contrary is made in this Agreement.

The United Kingdom

ARTICLE 11

Dividends

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
    • 15 percent of the gross amount of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from the immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax.
    • 10 percent of the gross amount of the dividends, in all other cases.
  • The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
  • No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.

ARTICLE 14

Capital Gains

  • Except as provided in Article 8 (Air Transport) and 9 (Shipping) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law.

ARTICLE 24

Elimination Of Double Taxation

  • Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):
    Indian tax payable under the laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within India (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Indian tax is computed.
  • Common method
  • Subject to paragraph 5 of this Article, for the purposes of paragraph 1 of this Article the term "Indian tax payable" shall be deemed to include:
    • Any amount which would have been payable as Indian tax but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year in question under the provisions of the Income-tax Act, 1961 (43 of 1961) referred to in paragraph 4(a) or (b) of this Article
    • That proportion of any amount which would have been payable as Indian tax by a resident of India but for a deduction allowed in computing the taxable income or an exemption or reduction granted for the year in question under the provisions of the Income-tax Act, 1961 (43 of 1961) referred to in paragraph 4(c) of this Article which corresponds to the proportion of that resident's total production in that year which was actually sold in the Indian Domestic Tariff Area under order issued by the Chief Controller of Import and Export being Nos. 21/90-93, 22/90-93, 23/90-23, 25/90-23, 26/90-23, 27/90-93, dated 30-3-1990 and similar Orders from time to time published in the Official Gazette by the Central Government under the power conferred on it by section 3 of the Import and Export (Control) Act, 1947 (18 of 1947).
  • The provisions referred to in this paragraph are:
    • sections 10 (4), 10(4B), 10(6) (vii a), 10(15) (iv), 33AB, 80HHD, 80-I and 80-IA.
    • Any other provision which may subsequently be enacted granting an exemption or reduction from tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character to a provision referred to in sub-paragraph (a) of this paragraph, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character
    • sections 10A and 10B
  • Relief from United Kingdom tax shall to be given by virtue of this paragraph 3 of this Article in respect of income from any sources if the income relates to a period starting more than 10 fiscally years after the deduction in computing taxable income or exemption from, or reduction of, Indian tax is first granted to the resident of the United Kingdom or to the resident of India, as the case may be, in respect of that source.
  • Income which in accordance with provisions of this Convention is not to be subjected to tax in a Contracting State may be taken into account for calculating the rate of tax to be imposed in that Contracting State on other income.
  • For the purposes of paragraphs 1 and 2 of this Article profits, income and chargeable gains, owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with the provisions of this Convention shall be deemed to arise from sources in that other Contracting State.

France

ARTICLE 11

Dividends

  • Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 10 percent of the gross amount of the dividends.
    • A resident of India who receives dividends from a company which is a resident of France which, if received by a resident of France, would entitle such resident to a tax credit (avoir fiscal), shall be entitled from the French Treasury to a payment equal to such tax credit (avoir fiscal) subject to the deduction of tax as provided for under paragraph 2 of this article.
    • The provisions of sub-paragraph (a) of this paragraph shall not apply if the recipient of the payment from the French Treasury provided for in sub-paragraph (a) of this paragraph is not subject to Indian tax in respect of the payment.
    • Payments from the French Treasury provided for under subparagraph (a) of this paragraph shall be deemed to be the dividend for the purpose of this Convention.
  • When the prepayment (precompte) is levied in respect of dividends paid by a company which is a resident of France to a resident of India who is not entitled to the payment from the French Treasury referred to in paragraph 3 of this article with respect to such dividends, such resident shall be entitled to the refund of that prepayment, subject to the deduction of the withholding tax with respect to the refunded amount in accordance with paragraph 2 of this article.

ARTICLE 14

Capital Gains

  • Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. For the purposes of this provision, immovable property pertaining to the industrial or commercial operation of such company shall not be taken into account.
  • Gains from the alienation of shares other than those mentioned in paragraph 4 representing a participation of at least 10 percent in a company which is a resident of a Contracting State may be taxed in that Contracting State.
  • Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 4 and 5 (immovable property, any property- other than immovable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts) shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 25

Elimination Of Double Taxation

  • Double taxation shall be avoided in the following manner:
    In the case of India:
    • Common mechanism
    • Where Indian resident receives an income that is taxable only in France, if at all India includes that income in the tax base, it should allow as deduction the amount of Indian tax attributable to such income.

    In the case of France:
    • Where dividend income (Article 11) or capital gains from the alienation of shares (para 5 of article 14) is taxed in India and is received by a resident of France, it will be considered for computation of French tax as well. In such cases, a tax credit of the amount of Indian tax paid will be given against French tax attributable to such income. Max. credit will be limited to French tax attributable to such income.
    • In case of other income (Para 4 & 6 of Article 14), tax credit will be equal to the amount of French tax attributable to such income
    • For the purposes of the tax credit given in (a) above the term "tax paid in India" shall be deemed to include any amount which would have been payable as Indian tax under the laws of India, and within the limits provided for by this Convention, for any year but for an exemption from, or reduction of, tax granted for that year under:
      • Any provisions [like section 10 (4), 10(4B), 10 (15)(iv) covering interest, section 10(6) (viia) covering salaries] granting a deduction in computing the taxable income or an exemption or reduction from tax which the competent authorities of the Contracting States agree to be for the purposes of the economic development of India, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.
    • Residents of France who own capital taxable in India may also be taxed in France on such capital. The French tax is computed by allowing a tax credit equal to the amount of tax paid in India in accordance with the provisions of article 24. However, such credit shall not exceed the French tax attributable to such capital.

Netherlands

ARTICLE 10

Dividends

  • Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 10 percent of the gross amount of the dividends.
  • The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2.
  • The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

ARTICLE 13

Capital Gains

  • Gains derived by a resident of one of the States from the alienation of shares (other than shares quoted on an approved stock exchange) forming part of a substantial interest in the capital stock of a company which is a resident of the other State, the value of which shares is derived principally from immovable property situated in that other State other than property in which the business of the company was carried on, may be taxed in that other State. A substantial interest exists when the resident owns 25 percent or more of the shares of the capital stock of a company.
  • Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 (immovable property, any property- other than immovable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts) shall be taxable only in the State of which the alienator is a resident.
    However, gains from the alienation of shares issued by a company resident in the other State which shares form part of at least a 10 percent interest in the capital stock of that company, may be taxed in that other State if the alienation takes place to a resident of that other State. However, such gains shall remain taxable only in the State of which the alienator is a resident if such gains are realised in the course of a corporate organisation, reorganization, amalgamation, division or similar transaction, and the buyer or the seller owns at least 10 percent of the capital of the other.
  • The provisions of paragraph 3 shall not affect the right of each of the States to levy according to its own law at tax on gains from the alienation of shares or 'jouissance' rights in a company, the capital of which is wholly or partly divided into shares and which under the laws of that State is a resident of that State, derived by an individual who is a resident of the other State and has been a resident of the first-mentioned State in the course of the last five years preceding the alienation of the shares or 'jouissance' rights.

ARTICLE 23

Elimination Of Double Taxation

  • The Netherlands, when imposing a tax on its residents, may include in the basis upon which such taxes are imposed the items of income or capital which, according to the provisions of this Convention, may be taxed in India.
  • However, where a resident of the Netherlands derives items of income or owns items of capital which, according to, paragraphs 4 and 5 of Article 13 (capital gains from alienation of shares) of this Convention may be taxed in India and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income or capital by allowing a reduction in its tax. These reductions shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose, the said items of income or capital shall be deemed to be included in the total amount of items of income or capital which are exempted from Netherlands tax under those provisions.
  • Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for items of income which, according to paragraph 2 of Article 10 (dividend) of this Convention may be taxed in India to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in India on these items of income subject to maximum of the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempted from Netherlands tax under the provisions of Netherlands tax for the avoidance of double taxation.
  • In India, double taxation shall be eliminated using the common mechanism.
    Provided that income which in accordance with the provisions of this Convention is not to be subjected to tax may be taken into account in calculating the rate of tax to be imposed.
    For the purposes of this paragraph in determining the taxes on income paid to the Netherlands, the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law ('Wet investeringsrekening') shall not be taken into account. For the purposes of this paragraph, the taxes referred to in paragraphs 3(a) and 4 of Article 2, other than the capital tax, shall be considered as taxes on income.
  • Where a resident of one of the States derives gains which may be taxed in the other State in accordance with paragraph 6 of Article 13, that other State shall allow a deduction from its tax on such gains to an amount equal to the tax levied in the first-mentioned State on the said gains.

Switzerland

ARTICLE 10

Dividends

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the dividends.

ARTICLE 13

Capital Gains

  • Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State.
  • Gains from the alienation of shares other than those mentioned in Paragraph 4, of a company which is a resident of a Contracting State:
    • Shall be taxable only in the Contracting State of which the alienator is a resident.
    • Notwithstanding the provision of sub-paragraph (a), India may tax gains from the alienation of shares in a company which is a resident of India.

    In this case, the provisions of sub-paragraph (b) of paragraph 1, of Article 23 shall apply.
  • Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 (immovable property, any property- other than immovable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts) shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 23

Elimination Of Double Taxation

  • In case of India
    • Common case of Tax credit
    • Where a resident of Switzerland derives gains from the alienation of shares which may be taxed in India according to Article 13, paragraph 5, sub-paragraph (b), India shall allow as a deduction from the tax on that income, an amount equal to the income-tax paid in Switzerland on these capital gains. The deduction shall not, however, exceed that part of the Indian income-tax, which is imposed on these capital gains.
    • Where a resident of Switzerland derives income which, in accordance with the provisions of this Agreement may be taxed in India, Switzerland shall, subject to the provisions of sub-paragraphs
    • Exempt such income from tax but may, in calculating tax on the remaining income of that resident, apply the rate of tax which would have been applicable, if the exempted income had not been so exempted : provided, however, that such exemption shall apply to gains referred to in paragraph of Article 13 only if actual taxation of such gains in India is demonstrated.
    • Where a resident of Switzerland derives dividends, interest, royalties or fees for 1 [technical] services which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in India, Switzerland shall allow, upon request, a relief to such resident. The relief may consist of,
      • A credit from the Swiss tax on the income of that resident of an amount equal to the tax levied in India in accordance with the provisions of Articles 10, 11 and 12, such credit shall not, however, exceed that part of the Swiss tax, as computed before the credit is given, which is appropriate to the income which may be taxed in India; or
      • A lump sum reduction of the Swiss tax; or
      • A partial exemption of such dividends, interest, royalties or fees for technical services from Swiss tax, in any case consisting at least of the deduction of the tax levied in India from the gross amount of the dividends, interest, royalties or fees for technical services.

Switzerland shall determine the applicable relief and regulate the procedure in accordance with the Swiss provisions relating to the carrying out of international Conventions of the Swiss Confederation for the avoidance of double taxation.

Singapore

ARTICLE 10

Dividends

  • Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  • However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed:
    • 10 percent of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 percent of the shares of the company paying the dividends.
    • 15 percent of the gross amount of the dividends in all other cases.

    This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
  • Notwithstanding the provisions of paragraph 2 of this Article, as long as Singapore does not impose a tax on dividends in addition to the tax chargeable on the profits or income of a company, dividends paid by a company which is a resident of Singapore to a resident of India shall be exempt from any tax in Singapore which may be chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
    • Dividends shall be deemed to arise in India if they are paid by a company which is a resident of India
    • Dividends shall be deemed to arise in Singapore:
      • If they are paid by a company which is a resident of Singapore; or
      • If they are paid by a company which is a resident of Malaysia out of profits arising in Singapore and qualifying as dividends arising in Singapore under Article VII of the Agreement for the Avoidance of Double Taxation between Singapore and Malaysia signed on 26th December, 1968.

ARTICLE 13

Capital Gains

  • Gains from the alienation of shares acquired before 1 April 2017 in a company which is a resident of a Contracting State shall be taxable only in the Contracting State in which the alienator is a resident.
  • Gains from the alienation of shares acquired on or after 1 April 2017 in a company which is a resident of a Contracting State may be taxed in that State.
  • However, the gains referred to in paragraph 4B of this Article which arise during the period beginning on 1 April 2017 and ending on 31 March 2019 may be taxed in the State of which the company whose shares are being alienated is a resident at a tax rate that shall not exceed 50% of the tax rate applicable on such gains in that State.
  • Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4A and 4B (immovable property, any property- other than immovable property- forming part of business property of a permanent establishment or pertaining to a fixed base, ships or aircrafts) of this Article shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 25

Avoidance Of Double Taxation

  • This agreement prevails over tax laws of the two countries.
  • Where a resident of India derives income that is taxed in Singapore, the common mechanism of tax credit will be used.
  • Tax Sparing Credit against Indian Tax
    For the purposes of 2. above, "Singapore tax paid" shall be deemed to include any amount of tax which would have been payable but for the reduction or exemption of Singapore tax granted under:
    • The provisions of the Economic Expansion Incentives (Relief from Income-tax) Act and the provisions of sections 13(1)(t), 13(1)(u), 13(1) (v), 13(2), 13A, 13B, 13F, 14B, 14E, 43A, 43C, 43D, 43E, 43F, 43G, 43H, 43-I, 43J and 43K of the Income-tax Act, insofar as they were in force and have not been modified since the date of signature of this Agreement or have been modified in minor respects so as not to affect their general character.
    • Any other provision which may subsequently be enacted granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character to any provision referred to in sub-paragraph (a) of this paragraph, if such provision has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.
  • Subject to the provisions of the laws of Singapore regarding the allowance as a credit against Singapore tax of tax paid in any country other than Singapore, Indian tax paid, whether directly or by deduction, in respect of income from sources within India shall be allowed as a credit against Singapore tax payable in respect of that income.
  • Tax Sparing Credit against Singaporean Tax
    For the purposes of paragraph 4 of this Article the term "Indian tax paid" shall be deemed to include any amount of tax which would have been payable in India but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year in question:
    • Sections 10(4), 10(4B), 10(5B), 10(15)(iv), 10A, 10B, 33AB, 80-I and 80-IA, insofar as these provisions were in force and have not been modified since the date of signature of this Agreement, or have been modified only in minor respects so as not to affect their general character,
    • Any other provision which may subsequently be enacted granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character to a provision referred to in sub-paragraph (a) of this paragraph, if such provision has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.
    • Income which, in accordance with the provisions of this Agreement, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State.