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June 2025

Article 13 of India-Singapore DTAA – Short Term Capital Gains from transfer of mutual funds is taxable under Article 13(5) of DTAA, and taxing right vests only with State of Residence.

By Geeta Jani | Dhishat B Mehta | K. Prasanna, Chartered Accountants
Reading Time 3 mins

3. [2025] 173 taxmann.com 570 (Mumbai - Trib.)

Anushka Sanjay Shah vs. ITO (IT)

IT (IT) A NO.174 (MUM) OF 2025

A.Y.: 2022-23 Dated: 26th March, 2025

Article 13 of India-Singapore DTAA – Short Term Capital Gains from transfer of mutual funds is taxable under Article 13(5) of DTAA, and taxing right vests only with State of Residence.

FACTS

The Assessee is a non-resident Indian and a tax resident of Singapore. During the relevant AY, the Assessee had earned short-term capital gain from sale of debt-oriented and equity-oriented mutual funds, amounting to ₹0.89 Crores and 0.47 Crores, respectively. The Assessee had contended that she was a tax resident of Singapore. Hence, she qualified for benefits under Article 13(5) of India-Singapore DTAA and therefore, only Singapore had taxing rights on such gain.

The AO held that gains from transfer of mutual funds were taxable in India and denied benefit under Article 13(5) of DTAA. The DRP held that units of mutual funds derive substantial value from assets located in India, therefore, such gains are taxable in India.

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