The Netherlands - Emerging entry route to India due to
amendment in India-Singapore Tax Treaty
Over the past few decades, the level of Foreign Direct
Investment (FDI) and Foreign Portfolio Investment (FPI) in India
has been considered as an indicator of the strength and
attractiveness of the Indian economy.
Under the Income-Tax Act, 1961 (the Act), the capital gains
earned by such investors on the disposal of their FDI/ FPI
investments in India are taxable in India. However, investors from
countries such as Mauritius, Singapore, Cyprus and Korea can avail
capital gains tax exemption in India under the Double Taxation
Avoidance Agreements (DTAA) tax treaties between India and their
country. Over a period of time, these countries have become the hub
for forming holding companies/pooling entities for routing
investments into India to avail the capital gain exemption due to
favourable DTAA provisions.
