A Singapore-based Non-Resident Indian successfully challenged a tax payment made on long-term capital gains amounting to ₹17.15 lakh from mutual fund investments. Initially, the taxpayer paid the tax in India before realizing that the India-Singapore Double Taxation Avoidance Agreement applies to these gains.

Understanding the DTAA Mechanism

Under Article 13(4) of the India-Singapore Double Taxation Avoidance Agreement, capital gains derived from the alienation of shares or securities are taxable only in the state of residence. The Income Tax Appellate Tribunal Mumbai ruled that mutual fund units are distinct from shares of a company, and capital gains from their redemption by a Singapore tax resident are covered by the residuary clause. The tribunal established that the tax treaty overrides the provisions of the Income Tax Act, 1961, when the former is more beneficial to the taxpayer.

  • Initial tax payment: ₹17.15 lakh on long-term capital gains
  • Tax jurisdiction: Taxable only in the country of residence under the DTAA
  • Tribunal ruling: ITAT directed the tax department to process a refund

The taxpayer filed a revised return seeking a refund, which was initially rejected by the tax authorities before the tribunal intervened. This legal clarity highlights the importance of leveraging tax treaties to avoid double taxation on cross-border investments.

Expanding Global Investment Horizons at GIFT City

In parallel developments regarding international investment opportunities, Aditya Birla Sun Life AMC has established a subsidiary at GIFT City. Aditya Birla Sun Life AMC International (IFSC) Limited was set up in Gandhinagar to provide global investment solutions.

  • Entity established: Aditya Birla Sun Life AMC International (IFSC) Limited
  • Location: GIFT City, Gandhinagar
  • Key leadership: A. Balasubramanian serves as Managing Director and CEO

The new entity introduced two retail funds of funds from GIFT City to facilitate cross-border investments. These offerings aim to provide resident Indians and international investors with structured pathways for global and domestic market participation.

New Retail Funds of Funds Offerings

The newly launched funds cater to both outbound and inbound capital flows under regulatory frameworks. A. Balasubramanian noted that the initiative aims to provide Indian investors with global growth avenues while offering NRI and foreign investors a way to participate in India’s economic growth.

  • ABSL Emerging Market Equity Fund: An outbound open-ended thematic retail fund designed for long-term capital appreciation by investing in vehicles like the ARGA Emerging Market Equity Fund.
  • ABSL India Growth Fund: An inbound open-ended diversified retail fund that invests in equity-oriented schemes managed by Aditya Birla Sun Life Mutual Fund.

The ABSL Emerging Market Equity Fund allows resident Indians to access global emerging markets via the Liberalised Remittance Scheme and enables eligible Indian corporate entities to invest through the Overseas Portfolio Investment route. Meanwhile, the ABSL India Growth Fund maintains a portfolio that is actively managed and dynamically allocated across various market capitalizations, themes, and sectors.