The mistakes that cost Singapore groups most in India are rarely about incorporation. They are assumptions carried over from Singapore: that gains are tax free, that a holding company without staff keeps its treaty benefit, that permanent residents share the citizen EPF exemption, or that Singapore's routine mark-up is accepted in India. This page lists twelve and the fix for each.
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Key facts
| Number of mistakes | 12 |
|---|---|
| Biggest money risks | Capital gains on shares after 1 April 2017, losing treaty rates without Form 41, shell holding companies |
| Biggest timing risks | Missing the 60-day allotment and 30-day FC-GPR clocks |
| Biggest people risks | Services PE after 90 days, EPF for non-citizens, visa category errors |
Tax and treaty
- Assuming Singapore's lack of capital gains tax follows the shares into India. India taxes gains on shares acquired on or after 1 April 2017. Model the Indian tax before pricing an exit. See exit and restructuring.
- Paying without treaty papers. Without the IRAS residency certificate, Form 41 and declarations, the payer withholds at the domestic rate of about 20% plus surcharge and cess. Apply early and renew yearly. See the tax treaty guide.
- Using a Singapore holding company with no substance. A company with annual operating spend below SGD 200,000 can be treated as a shell. Build real management and records. See the holdco guide.
- Letting Singapore staff stay too long on the same project. The services PE test is 90 days in a fiscal year, and 30 days for services to an associated enterprise, in the sources we checked. Track days per person.
- Copying Singapore's routine-services mark-up into India. India wants its own benchmarking of the Indian entity. See transfer pricing.
Money and FEMA
- Missing the 60-day and 30-day clocks. Allot shares within 60 days of the money arriving and file Form FC-GPR within 30 days of allotment. See funding and FEMA.
- Sending capital from the wrong account. Remit from the investor's own account and state the purpose. Third party payments can be rejected.
- Leaving agreements unstamped. An unstamped contract cannot be used as evidence in an Indian court until stamped and any penalty is paid. See contracts and arbitration.
People and data
- Assuming permanent residents are exempt from EPF. The published exemption speaks of Singapore citizens. See the employees guide.
- Using a business visa for people who work on the Indian payroll. Choose the visa by activity. See relocating staff.
- Moving personal data without a transfer agreement. The PDPA expects comparable protection, and India's DPDP duties start on 13 May 2027. See PDPA and DPDP.
- Ignoring the year-end gap and the land-border ownership check. A 31 December parent and a 31 March subsidiary need a timetable, and an owner in a land-border country can trigger Press Note 3 approval. See the compliance calendar.
A short prevention plan
- Hold a one-hour kick-off with the Singapore finance, legal and HR leads and the Indian adviser.
- Agree owners and dates for the documents, the residency certificate, the funding and the filings.
- Review the treaty papers and the day counts every quarter.
- Run a pre-exit review at least a year before any planned sale.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, IRAS, ACRA and the Singapore Academy of Law (apostilles).
Frequently asked questions
What is the most common mistake Singapore companies make in India?
Carrying Singapore assumptions into India: that gains are tax free, that a holding company without staff keeps its treaty benefit, and that Singapore's transfer pricing shortcuts apply.
What happens if I forget the FC-GPR filing?
The filing is late and must be regularised with a late submission fee or compounding. Banks and auditors may also raise questions.
Is the EPF exemption available to Singapore permanent residents?
The published guidance names Singapore citizens only. Assume PRs must contribute unless the EPFO confirms otherwise in writing.
How many days can Singapore staff spend in India before a permanent establishment arises?
In the treaty summaries we checked, services through employees for more than 90 days in a fiscal year, or 30 days for services to an associated enterprise, can create one. Confirm against the treaty text.
Do I need a stamped agreement for the Indian subsidiary?
Yes, to use it as evidence in an Indian court. An unstamped agreement is not void but cannot be used until stamped and any penalty is paid.
What is Press Note 3?
A 2020 FDI policy rule that requires government approval where the beneficial owner of the investor is in, or a citizen of, a country that shares a land border with India. Check the current position as the policy has been under review.
Related guides
The India-Singapore Tax Treaty (DTAA), Article by Article: India as Source State, Singapore as Residence State
The India-Singapore double taxation agreement explained article by article from the Singapore parent's point of view: rates table, permanent establishment, share gains, limitation of benefits and how to claim.
Read the guide →Using a Singapore Holding Company for Indian Investments: What the Treaty Gives, and What Substance Is Needed to Keep It
How a Singapore holdco is used to own Indian subsidiaries: treaty positions on dividends and gains, grandfathering, Article 24A limitation of benefits, principal purpose test, POEM, GAAR and indirect transfer risk.
Read the guide →Funding an Indian Subsidiary from Singapore: Equity, Convertible Instruments, ECB Loans and RBI Reporting
How a Singapore parent funds an Indian subsidiary: equity pricing, compulsorily convertible instruments, external commercial borrowings, remittance mechanics, FC-GPR and annual FLA return.
Read the guide →Relocating Singapore Staff to India: Visa Routes, OCI, Registration and Day-Count Controls
How to move employees from Singapore to India: e-Business and employment visas, the USD 25,000 salary floor, dependants, OCI for people of Indian origin, FRRO registration, residence tests and housing.
Read the guide →Sources
Last updated 21 October 2026. General information only, not legal or tax advice. Indian and Singapore rules change often; confirm current requirements before acting.