The revenue authorities of India and Singapore are meeting in New Delhi this week for the first round of negotiations concerning the review of the bilateral double taxation avoidance agreement between the two nations.
The main focus of the talks will be on withholding tax rates for dividend, interest, royalties, and technical service fees which the Singapore government has proposed should be reduced to 5% in order to increase investment flows between the two countries.
Under the regime currently in place between India and Singapore, withholding tax is levied on dividends at a rate of 10%, provided that the beneficial owner receiving the dividend owns at least one quarter of the firm paying the dividend. All other dividend payments are subject to a 15% withholding tax.
Meanwhile, the withholding rate on interest income is levied at a rate of 10-15% depending on the status of the financial institution involved. On royalties, the withholding tax is currently 15% on copyrights and 10% on industrial, commercial and scientific equipment.
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