As per the agreement, a citizen from Singapore making investments in India will not have to pay capital gains tax in India. A similar exemption will be available to Indian citizens investing in Singapore.

The notification states capital gains tax benefits will accrue under the DTAA with Singapore, so long as the capital gains benefits continue under the DTAA with Mauritius.

The DTAA also includes the provision for "exchange of information" on a request made by a contracting state. It also states the tax on royalties and fees for technical services accruing to a resident of the other country will not exceed 10 per cent.

As per the DTAA, a shell or a conduit company will not be entitled to the benefits of the capital gain tax. A shell company has been defined as any legal entity falling within the definition of resident with negligible or no business operations or with no real and continuous business activities carried out in that contracting state.

A resident of a country investing in the other country, will be deemed to be a shell company if its total expenditure on operation is less than $ 200,000 Singapore dollars or 50 lakh Indian rupees in the immediately preceding period of 24 months from the date the gains arise.

However, if the company is listed on a recognised stock exchange of the country of operation, it will not be regarded as a shell company.

The DTAA also provides for the setting up of an inter-governmental group consisting of representatives of the revenue authorities of the two countries to review the working of the provisions of the protocol at least once a year or earlier at the request of either country.