India: Investment Corridors and GIFT City: practical consequences

Structuring an investment in India from Singapore

The Singapore route to India remains open to structures with substance. A Singapore holding company that merely holds shares and is managed from elsewhere is now exposed to the limitation of benefits, the principal purpose test, India’s general anti-avoidance rules and the scrutiny of the place of effective management. Grandfathered shares acquired before 1 April 2017 retain the residence-based exemption, but only if the holding company satisfies the expenditure test in both of the two years before the sale and survives an inquiry into its purpose, which the Tiger Global judgment has made more searching. New investments enjoy no capital gains advantage over direct investment from most other states. Their advantages lie in reduced withholding rates on dividends and interest, in the reliability of Singapore governance and dispute resolution, and in access to the Singapore financial services ecosystem.

Investors should also consider GIFT City as an alternative or a complement. A fund investing only in India, with Indian or diaspora investors, may find the tax regime of the centre attractive. A fund with a regional mandate and international institutional investors will usually prefer Singapore. Some managers combine both, with a Singapore master fund and a GIFT City vehicle for Indian investors.

Checklist for practitioners

Determine whether the Indian shares were acquired before 1 April 2017 and document the acquisition date for each block of shares.
Keep evidence that the Singapore company has spent at least S$200,000 on operations in Singapore in each of the twelve-month periods within the 24 months before an exit, preferably with a certificate from the auditors and a tax residency certificate from IRAS.
Hold board meetings and take investment decisions in Singapore, with directors who exercise real judgement, so that the place of effective management is not attributed to India or to a third country.
Record the commercial reasons for using a Singapore entity, such as a regional mandate, co-investors, financing or governance, in order to meet the principal purpose test.
Check the beneficial owners of the fund and its investors against India’s rules on investment from countries sharing a land border with India.
Assess whether the exit will be an indirect transfer of Indian assets and plan the withholding and reporting obligations of the buyer.
Compare the Singapore structure with a GIFT City vehicle, including the relocation regime for offshore funds and the stability of the tax concessions.
Provide for arbitration seated in Singapore or another neutral seat in shareholders’ agreements, and check enforceability in India.
Monitor Indian case law after the Tiger Global judgment, CBDT circulars, the provisions of the Income-tax Act 2025 and the review of the CECA, which may change the position of existing structures.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

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I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

I operate across the key financial centres in South-East Asia, the Middle East and Switzerland, with a particular focus on asset protection, international tax and estate planning, as well as trusts, company administration and other fiduciary services. My philosophy is to serve as a trusted advisor working closely with my clients and to help them achieve their commercial objectives.

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