Now Reading: Singapore withholding tax may wipe out NRI FCNR leverage gains
-
01
Singapore withholding tax may wipe out NRI FCNR leverage gains
A Singapore tax ruling may erase most of the leverage advantage on FCNR(B) deposits for NRIs who are tax residents of Singapore. The Inland Revenue Authority of Singapore (IRAS) said interest paid…
The Story in Brief
A Singapore tax ruling may erase most of the leverage advantage on FCNR(B) deposits for NRIs who are tax residents of Singapore. The Inland Revenue Authority of Singapore (IRAS) said interest paid by a Singapore tax resident to an Indian bank is deemed to originate from Singapore, triggering withholding tax at 10% (under the India-Singapore DTAA) or 15% (domestic rate).
Tanvi Kanchan of Anand Rathi told ET Wealth that the tax applies only when borrowing is routed through a non-Singapore branch, such as one in GIFT City. Her calculations show a 9x leveraged $1 million deposit earning 4.20% could see net yield fall from 9.15% to as low as 4.22% after a 15% withholding tax. Loans from a bank's Singapore branch face no such tax.
The Indian Opinion
The coverage focuses on a technical tax twist that could gut the Centre's FCNR push for NRIs in Singapore. But the alarm is overblown: the tax hits only leveraged deposits routed through non-Singapore branches, not plain deposits. The real test is how many banks will shift lending to their Singapore arms to sidestep the 10% DTAA or 15% domestic rate. Watch the next IRAS circular: will it clarify that GIFT City loans also qualify for exemption? That alone will settle whether this is a pothole or a dead end.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
