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Singapore

NRE, NRO interest and Indian dividends as a Singapore resident

Your NRE interest is tax-free in India. NRO interest and dividends are taxed, but the treaty brings the rate down if you claim it.

You live in Singapore and you earn interest on your Indian accounts and dividends on Indian shares, and you want to know the tax. Singapore does not tax this foreign income, so it is entirely an Indian question, and the answer differs by account. NRE interest is tax-free, NRO interest and dividends are taxed, and the India-Singapore treaty brings those taxed rates down if you claim it properly. Here is how each is treated.
Last reviewed: 27 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

Singapore generally does not tax an individual's foreign income, so none of this is taxed at home, and the whole question is Indian, turning on the account. Interest on your NRE account is exempt from Indian tax while you are a non-resident, so it comes to you tax-free. Interest on your NRO account is taxable, with Indian banks withholding TDS at around 30 per cent, and dividends on Indian shares are taxable too, withheld at around 20 per cent. The India-Singapore treaty caps these: interest at 15 per cent, or 10 per cent if paid to a bank, and dividends at 15 per cent for an individual. To claim the lower rate you give the payer a Singapore tax residency certificate from the tax authority, with Form 41, formerly Form 10F, and a no-permanent-establishment declaration. The treaty carries an anti-abuse limitation-of-benefits clause aimed at shell companies, which a genuine Singapore-resident individual meets. Our job is to get the rate reduced and reclaim any excess.

References on this page

  • NRE interest is exempt from Indian tax while you are a non-resident; NRO interest is taxed (TDS around 30%) and dividends are taxed (around 20%)
  • The India-Singapore treaty caps interest at 15% (10% to a bank) and dividends at 15% for an individual
  • Claim the lower rate with a Singapore tax residency certificate, Form 41, and a no-permanent-establishment declaration
  • The treaty's limitation-of-benefits clause targets shell companies; a genuine Singapore-resident individual meets it

Tax-free NRE, taxed NRO and dividends

Singapore generally does not tax an individual on foreign-source income, so your Indian interest and dividends are not taxed in Singapore, and the whole question is Indian, turning on which account the money is in. Interest on your NRE account is exempt from Indian tax under Section 10(4) for as long as you are a non-resident, so it comes to you completely tax-free, and there is nothing to reduce, it is already at zero. That exemption is domestic, not a treaty benefit, so it stands on its own.

The taxed items are NRO interest and dividends. Interest on your NRO account is taxable, and the bank withholds TDS under Section 195, the non-resident section, at around 30 per cent with surcharge and cess. Dividends on Indian shares are taxable too, withheld at around 20 per cent. Those domestic rates are higher than the treaty allows, so the job is to bring them down to the treaty rate.

The treaty rate, and the certificate that unlocks it

The India-Singapore treaty caps these rates below the domestic withholding. Interest is capped at 15 per cent, reduced to 10 per cent where it is paid to a bank or financial institution, and dividends at 15 per cent for an individual shareholder. So your NRO interest can come down from around 30 per cent to 15, and your dividends from around 20 per cent to 15. The treaty rate is all-inclusive, so no surcharge or cess is added on top of it.

To get the lower rate, you give the payer, your bank or the company's registrar, a Singapore tax residency certificate issued by the Singapore tax authority, together with Form 41, formerly Form 10F, and a declaration that you have no permanent establishment in India. One feature of the India-Singapore treaty to be aware of is its limitation-of-benefits clause, an anti-abuse rule aimed at shell and conduit companies routed through Singapore; a genuine Singapore-resident individual with real substance generally meets it without difficulty, but it is why the treaty is stricter than some others about who can claim. Under the new Indian law the relief provision is renumbered, but the mechanism is unchanged. Where too much has already been withheld, we reclaim the excess through your Indian return. That is the whole job, and it is the Indian side we handle.

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What's involved

What the CA actually does

  1. 1

    We confirm the NRE exemption

    We confirm your NRE interest is tax-free in India and keep it correctly out of the tax net.

  2. 2

    We cut the NRO and dividend rate

    We use the treaty and your Singapore certificate to bring the NRO interest and dividend TDS down to the treaty rate.

  3. 3

    We handle the certificate and forms

    We prepare Form 41 and use your Singapore tax residency certificate so the payer applies the lower rate.

  4. 4

    We reclaim excess TDS

    Where too much was withheld, we file your return and recover the excess.

What to have ready

Documents you'll typically need

  • Your NRE, NRO and dividend income details
  • The TDS deducted and the rate used
  • Your Singapore tax residency certificate
  • Your PAN and account details

Frequently asked questions

Common questions

Earning Indian interest or dividends from Singapore?

Tell us your accounts and holdings. A practising CA will cut the TDS to the treaty rate and reclaim any excess, no obligation.

No card, no obligation. All certification and filing work is handled by ICAI-registered practising Chartered Accountants.