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Countries can either reduce or avoid double taxation by granting a tax exemption for income from foreign sources, or a foreign tax credit (FTC) for taxes from foreign sources. The agreement on the prevention of double taxation between India and Singapore currently provides for a tax based on the residence of the capital gains of 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. While foreign investors are using the Chinese DBA and the DBA of Hong Kong, Singapore and other countries to invest in China, China has made considerable progress over the past five years in implementing double taxation regulations and implementing protection techniques. The foreign tax on a taxpayer receives a tax credit for his or her national tax levied on the same income. The amount of the tax credit is generally limited to the lower amount paid/payable abroad and in the country of origin. This is a standard credit method for the full credit method, in which the tax paid in the country of origin is admitted as a full credit.

Tax credits are commonly referred to as Double Tax Relief (DTR) in Singapore. The right to the RDR should be invoked when filing the annual income tax returns (Form C) and included in the calculation of the company`s tax. Documentary documents (for example. B, tax revenues, letters from the foreign tax authorities or dividend vouchers) showing that the transferred income was taxed in the contracting country are necessary before the DTR duties can be taken into account. Example of benefit from the double taxation convention: Suppose interest on NRAs [clarification required] bank deposits draw 30 percent tax deduction at source in India. Since India has signed agreements with several countries to avoid double taxation, the tax can only be deducted at 10-15% instead of 30%. DTA`S CONCLUDED BY SINGAPORE Singapore has established an extensive network of DBA or other similar tax agreements with most of the world`s major economies.