Tax Treaty Victory: Non-Resident Investors Exempt from Short-Term Capital Gains on Mutual Fund Units Under India-Singapore Agreement

ITAT ruled on capital gains taxation for mutual fund units, determining that units of mutual funds constitute a distinct security category under Article 13(5) of the India-Singapore tax treaty. The tribunal concluded that short-term capital gains (STCG) arising from sale of equity and debt-oriented mutual fund units by a non-resident taxpayer are not taxable in India. The decision affirms that gains from mutual fund units fall outside Article 13(4)'s scope and are consequently exempt from Indian taxation pursuant to treaty provisions, providing a favorable interpretation for non-resident investors regarding cross-border investment income treatment. .....

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