Benefits of DTTA for NRI s in Sinagapore and UAE

How NRIs in UAE & Singapore Can Pay Zero Tax on Mutual Fund Capital Gains in India — Backed by a Recent ITAT Ruling

If you’re a Non-Resident Indian (NRI) living in the UAE or Singapore and investing in Indian mutual funds, here’s some good news:
You may not have to pay capital gains tax in India on the sale of mutual funds — if you claim treaty benefits under the Double Taxation Avoidance Agreement (DTAA) correctly.
No Capital Gains Tax in UAE & Singapore

Both the United Arab Emirates and Singapore do not levy tax on capital gains earned by individuals. So, if you are a tax resident of the UAE or Singapore, your capital gains income is taxable only in your country of residence — which is effectively tax-free for capital gains.
What the India–UAE & India–Singapore DTAAs Say

India has signed DTAAs with both UAE and Singapore.
Under these treaties, if you qualify as a tax resident of UAE or Singapore, capital gains from the sale of Indian securities (including mutual funds) are generally taxable only in your country of residence, not in India.

Example:

Article 13(4) of the India–UAE DTAA states:
“Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxable only in that State.”

So, mutual fund capital gains (which do not relate to immovable property or a permanent establishment) are taxable only in the UAE.

A similar provision exists in the India–Singapore DTAA under Article 13(4)/(5).
Key Mumbai ITAT Ruling: Anushka Sanjay Shah v. ITO

This position was recently upheld by the Mumbai Income Tax Appellate Tribunal (ITAT) in a landmark decision:

In Anushka Sanjay Shah v. ITO (ITA No. 174/Mum/2025), an NRI based in Singapore redeemed equity and debt mutual funds, generating over ₹1.35 crore in capital gains.

She claimed exemption under Article 13(4)/(5) of the India–Singapore DTAA, which taxes gains from property other than immovable property and shares only in the country of residence.

The tax department argued that mutual fund units are equivalent to shares. The ITAT rejected this and held that units of mutual funds are not shares — they are units issued by a trust, not a company.

Therefore, the capital gains were taxable only in Singapore, which does not levy tax on capital gains — resulting in zero tax in India.

👉 This ruling confirms that DTAAs must be honoured if the taxpayer proves non-resident status and provides all required documentation.
How to Claim This Benefit

✔ Get a Tax Residency Certificate (TRC)
Obtain a valid TRC from UAE or Singapore tax authorities.

✔ File Form 10F
Submit Form 10F along with your India tax return.

✔ Declare in your ITR
Disclose capital gains but claim exemption under the relevant DTAA article.

✔ Maintain supporting documents
Keep copies of your TRC, passport, bank statements, and mutual fund transaction proofs.
✅ Key Takeaway

If you’re an NRI residing in UAE or Singapore, you may legally pay zero tax in India on capital gains from mutual funds by correctly claiming DTAA benefits — with strong legal backing from the recent Mumbai ITAT decision in Anushka Sanjay Shah v. ITO.

Always consult a qualified tax advisor to ensure your filings and documents are accurate and compliant.

If you wish to understand how to comply with DTAA requirements and recent rulings, feel free to reach out for professional guidance:
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