Singapore tax treaty needs to be amended, says finance minister

Finance Minister Arun Jaitley has stated that the capital gains tax provisions of the recently-concluded tax pact with Mauritius will be extended only when India renegotiates its tax treaty with Singapore.

However, he didn’t state the time by when this renegotiation would be done, saying that it "is a separate sovereign state, it (Mauritius treaty) does not ipso facto automatically extend. The principles will have to be applied, but applied through a process of renegotiation."

Jaitley was speaking at an Indian Women Press Corps event in New Delhi, where he added, "But sooner or later, that process will commence and hopefully conclude."

It was on May 10 that the 34-year-old tax treaty with Mauritius was amended. Because of this, India will begin imposing capital gains tax on investments in shares through Mauritius from April 2017.

This has also triggered a similar amendment in India's tax treaty with Singapore.

"I am not giving it a timeline, because if you recollect, the renegotiation process of the Mauritius treaty started first in 1996 and it continued till about 2002 and then there was a pause. Singapore was entered into in 2005 and one of the covenants of Singapore was that provisions of what happens in Mauritius treaty would extend to it," Jaitley said.

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