Singapore Scrutinizing Undeclared Assets Held by Indians

With Singapore and India swapping financial data as per the revised double taxation avoidance agreement (DTA), people who have assets or bank accounts that is undeclared in Singapore are in for trouble.

DTAA came into force last year. “The updated DTA preserves the existing tax exemption on capital gains for shares acquired before 1 Apr.2017, while providing a transitional arrangement for shares acquired on or after 1 April 2017,” said a statement from Singapore’s Ministry of Finance.

It added that for shares acquired on or after April 1, 2017, there will be a two-year transition period, during which the capital gains from such shares will be taxed at 50 per cent of India’s domestic tax rate if the capital gains arise during April 1, 2017 to March 31, 2019.

If the holder of these assets or bank accounts has not declared them to authorities in India, he is liable to be prosecuted under the foreign black money law, passed in the year 2015. Those found guilty will be liable to pay taxes and penalties up to three times the tax computed and may face up to seven years imprisonment.

The foreign black money law deals with the problem of the black money that is undisclosed foreign income and assets. “The procedure for dealing with such income and assets and to provide for imposition of tax on any undisclosed foreign income and asset held outside India and for matters connected therewith or incidental thereto,” said a statement from the Indian Ministry of Law and Justice.

A Delhi-based person was handed a letter from the tax authorities in Singapore at the end of last year, the Economic Times reported. The authorities in Singapore are looking for account details and investigating the beneficial ownership of assets from banks and other agencies held between 2008 and 2017. Once the information is collated, it will be shared with Indian authorities.

“Singapore and India have reached agreement to phase out the capital gains tax exemption gradually, and have also committed to find new ways to promote bilateral investments,” the statement added.

Banks have also been asked to provide records related to all accounts that a person may own either directly or indirectly. In some cases, the person may also hold these accounts as a beneficial owner or may have the power of attorney over between 2008 and 2017, the ET report added.