This journey assumes
- The Indian subsidiary carries on a business that is open to 100% FDI under the automatic route; it is not in a prohibited, capped or government-route sector.
- No beneficial owner of the Singapore company is linked to a country sharing a land border with India.
- The Singapore company is tax resident in Singapore and will be managed there.
- Funding will be ordinary equity at incorporation, with later rounds of equity or a loan from the Singapore parent.
- Rules are stated as at 19 October 2026.
If any assumption is wrong for your business, the conclusions change. Ask WONE Global to re-run the analysis with your facts.
Both sides of the border, issue by issue
Each row is one part of the work. The left and right columns show what each country's rules require, so you can see where one side's decision constrains the other.
Investing into India under the FDI rules
Most sectors are open to 100% FDI under the automatic route, so no prior government approval is needed, but the land-border beneficial ownership test must be checked. Money must come in through banking channels, shares must be issued within sixty days and reported in Form FC-GPR within thirty days, and an annual FLA return follows. On the Singapore side the rules that matter are those on the holding company's residence and taxation.
- FDI of up to 100% is permitted under the automatic route in most sectors, without prior RBI or government approval; check the sector against the FDI Policy and Non-debt Instruments Rules.123
- If any beneficial owner behind the Singapore company is linked to a country sharing a land border with India, the government route applies instead, including for later transfers.4
- Consideration must arrive by inward remittance through banking channels; shares must be issued within sixty days or the money refunded within fifteen days after that; the issue is reported in Form FC-GPR within thirty days, and Form FLA is due by 15 July each year.5678
- The Singapore holding company is a separate company with at least one director ordinarily resident in Singapore, which also supports its claim to be managed in Singapore.9
- Singapore taxes companies at 17% on Singapore-source income and on foreign-source income when received in Singapore, so dividends from India are taxable unless an exemption applies.1011
Forming the Indian company
The usual vehicle is a private limited company incorporated through the MCA SPICe+ form, which also issues PAN and TAN and registers with EPFO and ESIC. It needs at least two directors, one of whom has stayed in India for at least 182 days, and any further investment it makes in India is treated as indirect foreign investment.
- A private company needs at least two directors, and every company must have at least one director who has stayed in India for at least 182 days.1213
- SPICe+ handles name reservation and incorporation together with director identification numbers, PAN, TAN, EPFO and ESIC registration.14
- Because the subsidiary will be foreign-owned, any downstream investment it makes in other Indian companies counts as indirect foreign investment and must meet entry route, cap and pricing conditions.15
- If the founders run both companies from India, the Singapore company risks being treated as Indian tax resident under the place of effective management test, which India applies to foreign companies above INR 500 million turnover.16
- A Singapore company must keep a director who is ordinarily resident in Singapore; board decisions on the Indian investment should be taken there.9
Tax and the India-Singapore DTAA
India taxes dividends paid to a foreign company at 20% under domestic law, reduced to 10% under the DTAA where the Singapore company holds at least 25%. Interest is capped at 15% (10% from banks) and royalties and fees for technical services at 10%. Since the 2016 protocol, India can tax gains on shares acquired from 1 April 2017. In Singapore, Indian dividends can be exempt if Indian tax conditions are met, and onward dividends from Singapore bear no withholding.
- Dividends paid to a foreign company are taxed at 20% under section 207 of the Income-tax Act, 2025; the treaty rate applies if more beneficial, and the DTAA caps the rate at 10% where the Singapore company owns at least 25% of the shares (15% otherwise).171819
- Treaty rates on interest are 10% (bank or similar institution) or 15%, and 10% on royalties and fees for technical services. A Singapore tax residency certificate and the prescribed form are needed to claim them.2021
- A domestic company may opt for a 22% corporate tax rate plus surcharge and cess, subject to conditions, and transactions with the Singapore parent must be at arm's length and documented.2223
- Gains on Indian shares acquired on or after 1 April 2017 may be taxed in India, so an eventual exit by the Singapore company is taxable in India under Indian law.24
- Indian dividends are exempt in Singapore if they were subject to tax in India, India's headline rate is at least 15% and the Comptroller is satisfied the exemption is beneficial; underlying Indian corporate tax counts.25
- If the exemption does not apply, double taxation relief is available under section 50 for income from a treaty country such as India.26
- Singapore levies no withholding tax on dividends paid by the holding company to its own shareholders.27
Treaty access: substance, LOB, the principal purpose test and GAAR
Treaty benefits are not automatic. Article 24A denies the grandfathered capital gains benefits to shell or conduit companies spending less than S$200,000 a year in Singapore, although those benefits do not cover shares acquired from 1 April 2017, so for a new subsidiary the wider tests matter more. The MLI principal purpose test, shown in the department's synthesised text, can deny any benefit where obtaining it was a principal purpose. A 2025 tribunal ruling has questioned whether MLI provisions apply without separate Indian notification. India's domestic GAAR was not source-checked here.
- The department's synthesised text applies the MLI principal purpose test to the India-Singapore treaty for Indian withholding taxes from 1 April 2020.28
- A Mumbai tribunal ruled in 2025, under the India-Ireland treaty, that MLI provisions cannot be enforced without a separate section 90(1) notification; the position is not settled, so plan as if the principal purpose test applies.29
- If the Singapore company is in substance managed from India it may be Indian resident, which would take it outside the treaty as a Singapore resident.16
- A Singapore company with annual operating expenditure in Singapore below S$200,000 over the look-back period is deemed a shell or conduit under Article 24A, unless listed. The article guards only the grandfathered capital gains benefits, which do not reach shares in a new subsidiary acquired after 1 April 2017, but the same spending is useful evidence of substance.3024
- The MLI entered into force for Singapore on 1 April 2019 and applies to Singapore withholding taxes from 1 January 2020; real staff, decision-making and expenditure in Singapore are the best evidence for both tests.289
Funding: equity or an external commercial borrowing
Equity is reported as FDI and has no repayment, but returns come out as dividends or on exit. A loan from the Singapore parent is an external commercial borrowing under the RBI framework (updated September 2026), with interest deductible in India subject to the 30% of EBITDA limit and taxed at treaty rates. The ECB conditions themselves could not yet be checked.
- Equity contributions follow the FDI route and reporting (inward remittance, issue within sixty days, FC-GPR within thirty days).567
- A loan from the Singapore parent falls under the RBI Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, shown as updated on 8 September 2026; eligibility, limits, maturity and cost conditions must be checked with the AD bank.31
- Interest to the Singapore parent above 30% of EBITDA is disallowed where total such interest exceeds INR 10 million, and Indian withholding on the interest is capped at 15% under the treaty.3220
Staff and social security
Staff sent from Singapore to India who hold non-Indian passports are international workers under India's provident fund scheme and contribute on their full salary. Singapore is not on EPFO's list of social security agreement partners, so no exemption applies. Indian visas for Singapore staff were not source-checked.
- Non-Indian passport holders working for the Indian subsidiary are international workers who contribute to EPF on full salary, without the wage ceiling.33
- Singapore is not on EPFO's list of countries with which India has social security agreements, so there is no agreement-based exemption.34
- Singapore staff providing services in India for the Singapore company for more than 90 days in a fiscal year, or 30 days for a related enterprise, can create an Indian permanent establishment for it.35
- The India-Singapore Comprehensive Economic Cooperation Agreement is among India's regional trade agreements in force listed by the WTO; its services and movement-of-people provisions were not checked here.36
Structures to consider
These are the structures businesses commonly weigh, not a recommendation. The right one depends on the facts listed under "What we need from you".
What has to happen first
- IndiaConfirm the Indian activity is under the 100% automatic route and screen beneficial owners for land-border links.
- Both sidesDecide the funding mix (equity, later ECB) and the Singapore substance plan (staff, expenditure, board).After step 1
- SingaporeSingapore board approves the investment; obtain a Singapore tax residency certificate for the coming year.After step 2
- IndiaIncorporate the Indian private company through SPICe+ with at least two directors, one resident in India 182 days or more.After step 1
- Both sidesOpen the Indian bank account and remit the share subscription through banking channels.After step 3, 4
- IndiaIssue shares within sixty days of receipt and file Form FC-GPR within thirty days of issue.After step 5
- IndiaRegister for GST and payroll; enrol international workers in EPF on full salary.After step 4
- Both sidesPut intercompany agreements and transfer pricing documentation in place for any services, royalties or loans.After step 4
- IndiaIf a loan is used, agree terms within the ECB framework with the AD bank and complete ECB reporting before drawdown.After step 2, 5
- Both sidesBefore paying dividends or interest, provide the tax residency certificate and prescribed form so the treaty rate is applied.After step 3, 6
- Both sidesOngoing: Form FLA by 15 July each year, Indian tax returns, Singapore returns, and annual review of Singapore substance and treaty eligibility.After step 6
What we need from you before anyone can advise
- The Indian business activity and its FDI sector conditions.
- Ultimate beneficial owners of the Singapore company and any land-border links.
- The Singapore company's staff, annual operating expenditure in Singapore and where its board meets.
- Planned funding amounts, split between equity and debt, and the expected time to profitability.
- Whether the Indian company will pay royalties or service fees to Singapore.
- Expected exit route and timing (sale of shares, listing, or dividends).
- Number of foreign staff to be employed in India and their nationalities.
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India's General Anti-Avoidance Rule under the Income-tax Act, 2025 (thresholds, approval process, interaction with treaties) was not source-checked.
- The RBI External Commercial Borrowings Master Direction text (eligible borrowers, recognised lenders, limits, minimum average maturity, cost ceilings, reporting) could not yet be checked: RBI pages returned unrelated content.
- FDI pricing guidelines for share issues (fair value and who certifies it) under the Non-debt Instruments Rules could not yet be checked.
- Which instruments count as equity instruments for FDI (for example compulsorily convertible preference shares or debentures) was not confirmed.
- Indian domestic tax rates on capital gains realised by a non-resident company were not researched.
- Indian employment visa conditions for Singapore staff were not researched.
- Whether India and Singapore have a bilateral investment treaty in force, and the investment chapter of CECA, were not confirmed (search budget exhausted).
- The effect of the 2025 Mumbai tribunal ruling on MLI notification for the India-Singapore treaty, and any later appeal, were not checked; the ruling relies on a secondary source.
- The EPFO list of social security agreements is from a brochure last dated July 2022.
Brief for your advisers
Questions to put to your advisers in each country. Copy them, or download them as a text file to send with your requirement.
- Indian FEMA adviser: is our activity fully under the automatic route, and what does the AD bank need for remittance, share issue and Form FC-GPR?
- Indian FEMA adviser: what are the current ECB conditions (eligibility, limits, maturity, cost) for a loan from our Singapore parent after the September 2026 update?
- Indian tax adviser: will the 10% dividend rate and 15% interest rate under the DTAA be available given the principal purpose test, India's GAAR and our Singapore substance?
- Indian tax adviser: how would a future exit be taxed in India under the Income-tax Act, 2025 and Article 13 of the DTAA?
- Singapore tax adviser: will dividends from India qualify for the foreign-sourced dividend exemption, and how will interest from India be taxed?
- Singapore adviser: what staff, expenditure and governance should the Singapore company have to support Singapore residence and treaty access?
- Indian payroll adviser: how do the EPF international worker rules apply to our Singapore staff, and what visas do they need?
- Both tax advisers: what transfer pricing policy should govern services, royalties or interest between the companies?
Who can help, on each side
India
- Setting up and running a company · Arranged by WONE Global on request
- Payments and currency · Arranged by WONE Global on request
- Licences, permits and regulators · Arranged by WONE Global on request
- Tax and structuring · Led by Sandeep Gupta
- Accounting and annual filings · Led by Sandeep Gupta
- Anti-bribery, sanctions and compliance · Arranged by WONE Global on request
- Treasury and funding · Arranged by WONE Global on request
- Banking and capital · Arranged by WONE Global on request
- Employment, payroll and immigration · Arranged by WONE Global on request
Singapore
- Setting up and running a company · Arranged by WONE Global on request
- Payments and currency · Arranged by WONE Global on request
- Licences, permits and regulators · Arranged by WONE Global on request
- Tax and structuring · Arranged by WONE Global on request
- Accounting and annual filings · Arranged by WONE Global on request
- Anti-bribery, sanctions and compliance · Arranged by WONE Global on request
- Treasury and funding · Arranged by WONE Global on request
- Banking and capital · Arranged by WONE Global on request
- Employment, payroll and immigration · Arranged by WONE Global on request
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
DPIIT's FDI policy FAQs state that FDI of up to 100% is permitted under the automatic route in most sectors and activities. Central rule. Sector caps, conditions and prohibited sectors are set out in the FDI Policy and the Non-debt Instruments Rules.
Foreign investment under the automatic route does not need prior approval of the RBI or the central government, while investment under the government route needs prior government approval and must follow the conditions of that approval. Applies by sector under the Consolidated FDI Policy and the FEMA (Non-debt Instruments) Rules, 2019. Central rule.
The FAQ document is undated; it refers to the Consolidated FDI Policy Circular of 15 October 2020 as amended.
FDI policy issued by DPIIT through the Consolidated FDI Policy, Press Notes and Press Releases is notified by the Department of Economic Affairs as amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 under the Foreign Exchange Management Act, 1999. Central rule.
An entity of a country sharing a land border with India, or an investment whose beneficial owner is linked to such a country, can invest only under the government route, and a later transfer that brings beneficial ownership within this category also needs government approval. Press Note 3 (2020 Series) dated 17 April 2020, as revised in 2026; subject to the 10% non-controlling exception in in-establish-004. Central rule.
The FAQ uses the 2020 wording (beneficial owner situated in or a citizen of such a country). Secondary sources report that Press Note 2 (2026 Series) dated 15 March 2026 removed the 'situated in' limb so the test now turns on citizens and entities of those countries; the official Press Note text could not yet be checked.
Consideration for equity instruments issued to a person resident outside India must be paid by inward remittance from abroad through banking channels or from the investor's repatriable foreign currency or rupee account in India, and may include a swap of equity instruments. Central rule (RBI).
Equity instruments must be issued to the foreign investor within sixty days of receipt of the consideration, failing which the consideration must be refunded within fifteen days after the sixty days end. Central rule (RBI).
An Indian company that issues equity instruments to a person resident outside India as foreign direct investment must report the issue in Form FC-GPR not later than thirty days from the date of issue. Central rule (RBI). Reporting is made through an authorised dealer bank unless otherwise stated.
An Indian company that has received foreign direct investment must submit the Annual Return on Foreign Liabilities and Assets (Form FLA) to the Reserve Bank on or before 15 July each year. Central rule (RBI).
A company director must be ordinarily resident in Singapore, meaning a Singapore citizen, Singapore permanent resident or someone who meets ACRA's local residency rules. ACRA states this as a director requirement; in practice it means the board must include at least one locally resident director (Companies Act 1967). Foreign Identification Number holders should check with MOM or ICA before accepting a role.
ACRA's guide lists residency under the director requirements without restating the statutory 'at least one director' wording; the underlying rule is in the Companies Act 1967, which could not yet be checked for this record.
Singapore's corporate income tax rate is 17%. Flat rate on chargeable income, before partial exemption, start-up exemption, rebates and incentives.
The IRAS page body did not render for automated reading; the rate is stated in the page summary. Confirmed by PwC Worldwide Tax Summaries (last reviewed 2 July 2026).
Companies are taxed on Singapore-sourced income as it arises and on foreign-sourced income when it is received in Singapore. Exemptions for certain foreign-sourced dividends, branch profits and service income are subject to conditions not covered here.
No official page stating this was opened.
A private company must have at least two directors, a public company at least three and a one person company one, with a maximum of fifteen unless more are approved by special resolution. Section 149(1), Companies Act, 2013. Central rule.
Secondary summary of the statute by the professional body; the official Act text on India Code or the MCA site could not yet be checked.
Every company must have at least one director who has stayed in India for a total period of not less than 182 days. Section 149(3), Companies Act, 2013. Applies to foreign-owned subsidiaries. Central rule.
The sources opened describe the period as the previous calendar year; the measurement period may have been amended by later legislation. Confirm the current wording on an official text.
SPICe+ is the Ministry of Corporate Affairs' integrated web form for incorporating a company, with Part A for name reservation and Part B covering incorporation, director identification numbers, PAN and TAN, EPFO and ESIC registration, GSTIN and opening a bank account, filed with linked eMoA, eAoA and AGILE-PRO-S forms. Professional tax registration through the form applies to new companies in Maharashtra and Karnataka only (a state-level registration). Central filing.
Downstream investment by an Indian entity that is foreign-owned or foreign-controlled counts as indirect foreign investment and must comply with the entry route, sectoral caps, pricing guidelines and other conditions. Central rule (FDI Policy and FEMA Non-debt Instruments Rules).
A foreign company is resident in India in a year if its place of effective management (where key management and commercial decisions for the business as a whole are in substance made) is in India. Circulars say the POEM test does not apply to a foreign company with turnover or gross receipts of INR 500 million or less in the year.
Secondary source; the corresponding provision of the Income-tax Act, 2025 could not yet be checked.
Under section 207 of the Income-tax Act, 2025, dividends received by a foreign company are taxed at 20%, other than dividends from a unit in an International Financial Services Centre, which are taxed at 10%. Rate before any surcharge and health and education cess, which were not confirmed.
Surcharge and cess are not stated on this page.
India taxes a non-resident's dividends, interest, royalties and fees for technical services under the Income-tax Act or the applicable treaty, whichever is more beneficial to the non-resident. Requires the non-resident to be entitled to the treaty (residence, beneficial ownership, documentation, anti-abuse rules).
The page states it reflects the Income-tax Act, 1961 as amended by the Finance Act, 2026; its 'last reviewed' date is blank.
Article 10(2) of the India-Singapore DTAA caps source-state tax at 10% of the gross dividend if the beneficial owner is a company owning at least 25% of the shares of the paying company, and 15% in all other cases. Beneficial owner condition applies.
Secondary reproduction of the treaty text; the official India-Singapore synthesised text on incometaxindia.gov.in could not yet be checked. The rates match the department's official comparison table.
The Income Tax Department lists India-Singapore treaty rates of 10% (bank or similar institution, including insurers) or 15% on interest, 10% on royalties and 10% on fees for technical services. India-Singapore DTAA Articles 11 and 12.
To claim a treaty withholding rate, a non-resident must provide a valid tax residency certificate and the prescribed form, which is mandatory even if the certificate already contains the required information. Central tax. The Supreme Court has treated the certificate as an eligibility condition rather than conclusive proof of treaty entitlement.
Secondary source; the prescribed form number under the 2026 Rules was not confirmed.
A domestic company may opt for a corporate income tax rate of 22% plus a 10% surcharge and 4% health and education cess, subject to conditions. Optional regime for domestic companies. Otherwise basic rates of 25% (turnover up to INR 4 billion in the reference year) or 30% apply. Central tax.
Secondary source (last reviewed 11 May 2026); the Act's rate provisions could not yet be checked on an official page.
Indian transfer pricing rules require international transactions between associated enterprises to be at arm's length, supported by annual documentation and an accountant's report filed one month before the income tax return. A new accountant's report form applies from tax year 2026-27. A master file is required for groups with consolidated turnover above INR 5 billion (plus transaction thresholds); country-by-country reporting applies above INR 64 billion.
Secondary source.
Under Article 13 of the India-Singapore DTAA, gains from alienation of shares of an Indian company acquired on or after 1 April 2017 may be taxed in India, while gains on shares acquired before that date are taxable only in the seller's state of residence. Treaty as amended by the 2016 protocol. A transitional 50% rate applied to gains arising between 1 April 2017 and 31 March 2019.
Foreign-sourced dividends received in Singapore by a resident company are exempt from Singapore tax if they were subject to tax in the source country, the source country's headline corporate tax rate is at least 15%, and the Comptroller is satisfied the exemption is beneficial. Section 13(8) of the Income Tax Act 1947. Tax paid on a dividend includes underlying tax on the profits out of which it is paid.
Where the foreign-sourced income exemption conditions are not met, a Singapore resident can claim double taxation relief under section 50 of the Income Tax Act for income from a country with which Singapore has a double taxation agreement. Unilateral tax credit under section 50A applies to countries without such an agreement.
Singapore does not levy withholding tax on dividends paid by Singapore-resident companies, which operate a one-tier system under which dividends are tax-exempt in shareholders' hands.
No official page stating this was opened.
The Income Tax Department's synthesised text of the India-Singapore DTAA shows the MLI principal purpose test applying to the treaty, with effect for withholding taxes in India from 1 April 2020 and in Singapore from 1 January 2020. The MLI entered into force for India on 1 October 2019 and for Singapore on 1 April 2019. The department states the synthesised text is for convenience and is not a source of law.
In 2025 the Mumbai bench of the Income Tax Appellate Tribunal held, in a case under the India-Ireland treaty, that MLI provisions including the principal purpose test cannot be enforced in India without a separate notification under section 90(1) of the Income-tax Act. Tribunal decision (Sky High Appeal XLIII Leasing Company Limited); an appeal by the tax authorities was considered possible. Its effect on other treaties such as India-Singapore is not settled.
Secondary source; the tribunal order could not yet be checked. Later appellate developments were not checked.
Article 24A of the India-Singapore DTAA denies the grandfathered capital gains benefits to shell or conduit companies, and deems a Singapore company a shell or conduit if its annual operating expenditure in Singapore is less than S$200,000 over the relevant look-back period, unless it is listed on a recognised stock exchange. Look-back of 24 months for the paragraph 4A benefit and 12 months for paragraph 4C; the Indian equivalent threshold is Rs 5,000,000. Applies to the capital gains benefits in Article 13; the principal purpose test applies more widely.
The RBI Master Direction on Foreign Investment in India (issued 4 January 2018) is shown as updated up to 15 June 2026, and the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations as updated on 8 September 2026. Central rule (RBI).
The listing was opened; the Master Direction texts themselves could not yet be checked.
Interest paid by an Indian company to an overseas associated enterprise, or on third-party debt it guarantees, is disallowed to the extent it exceeds 30% of EBITDA, with carry forward for up to eight years; the rule does not apply where total such interest does not exceed INR 10 million. Central tax.
Secondary source (page last reviewed 11 May 2026); the section of the Income-tax Act, 2025 could not yet be checked.
Employees holding a non-Indian passport who work for an EPF-covered establishment in India are international workers, who contribute on their full salary because the wage ceiling does not apply to them. Exemption is available where the worker is covered by a social security agreement with the home country.
EPFO's brochure on international workers lists India's social security agreements with 20 countries (Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea, Netherlands, Hungary, Finland, Sweden, Czech Republic, Norway, Austria, Canada, Australia, Japan, Quebec, Portugal and Brazil, the last not yet in force); Singapore is not among them. The brochure is undated; the latest date in it is 27 July 2022.
Under Article 5 of the India-Singapore DTAA, services furnished through employees or other personnel create a permanent establishment if they continue for more than 90 days in any fiscal year, or for more than 30 days where performed for a related enterprise. A 183-day threshold applies to services connected with mineral oil exploration or extraction.
The WTO lists among India's regional trade agreements in force its agreements with the United Arab Emirates, Japan, the Republic of Korea, Singapore, Malaysia, Mauritius, Thailand, Chile and MERCOSUR, the ASEAN-India agreement and the South Asian Free Trade Agreement. As listed on the WTO database page for India; dates and coverage of each agreement are on individual cards.
The India-UAE card could not yet be checked, so its signature and entry-into-force dates were not confirmed. The scope and coverage of each listed agreement were not checked.
