What the treaty actually says about fund units
Under the India-Singapore treaty, capital gains are dealt with in Article 13. After the 2016 protocol, India can tax gains on shares of an Indian company acquired on or after 1 April 2017, under Article 13(4B), while shares bought before that are grandfathered under Article 13(4A). Everything else falls into the residual clause, Article 13(5), which gives the right to tax only to the country where you are resident.
Mutual fund units are not shares. An Indian mutual fund is a trust, and a unit is issued by that trust, not by a company, so in law a unit and a share are different kinds of security. Because units are not covered by the shares clauses, they land in Article 13(5), and the right to tax a Singapore resident's gain sits only with Singapore. Singapore does not tax capital gains of this kind, so nothing is left to pay in either place.
The Tribunal ruling this rests on, and why it is not yet settled
This is not just a reading of the treaty. In a 2025 decision, the Mumbai Tribunal in Anushka Sanjay Shah held, for a Singapore resident with about 1.35 crore rupees of gains across debt and equity mutual funds, that units are not shares and fall under Article 13(5), so the gains were not taxable in India. The tax officer had argued the opposite, that units should be treated like shares, and the Tribunal rejected it.
One caution matters. This is a Tribunal decision, the first level of appeal, and the department can still take it to a High Court. There is no High Court or Supreme Court ruling settling the point yet. So treat it as a strong, well-reasoned position rather than a certainty, and make sure your Singapore residency is genuine and documented, because that is what the whole claim stands on.
Shares are different, and so is the paperwork
The units-are-not-shares logic does not rescue direct shares. If you sell actual shares of an Indian company, India keeps the right to tax the gain under Article 13(4B) for anything bought on or after 1 April 2017, so that gain is taxable here in the normal way. The exemption is specific to fund units, whether the fund holds equity or debt.
Either way, the fund house deducts TDS when you redeem, under Section 195 (Section 393 from FY 2026-27), because it cannot apply a treaty position for you at source. You claim the exemption yourself by filing an Indian return, ITR-2, showing the gain and the Article 13(5) position, and the TDS comes back as a refund. You support it with a Tax Residency Certificate from Singapore and Form 10F (Form 41 from FY 2026-27). If the amounts are large and you would rather not wait for a refund, a lower or nil deduction certificate under Section 197 (Section 395) before redemption is the alternative.
A worked example
Meera, a Singapore tax resident, redeems Indian mutual funds and books a gain of forty lakh rupees across equity and debt schemes. The fund house deducts TDS on redemption, so the money reaches her short.
She files an Indian return claiming the gain is taxable only in Singapore under Article 13(5), backed by her Singapore Tax Residency Certificate and Form 10F. The deducted TDS comes back as a refund with interest. Had she instead sold shares of an Indian company bought in 2020, that gain would have stayed taxable in India, because the exemption covers units, not shares.