The third Protocol amending the existing India-Singapore Double taxation Avoidance Agreement (DTAA) has entered into force in Singapore on Monday, Singapore's tax authorities have said.

This would mean that the provisions provided in the third Protocol _ signed in December 2016_have become law in Singapore, some legal experts said.

It may be recalled that the updated tax agreement (protocol) preserves the existing tax exemption on capital gains for shares acquired before April 1, 2017, while providing a transitional arrangement for shares acquired on or after April 2017.

For shares acquired on or after April 1, 2017, there will be a two-year transition period.

In this transitional period, capital gains from such shares acquired on or after April 1 2017 will be taxed at 50 percent of domestic tax rate if the capital gains arise during April 1, 2017 to March 2019.

For gains that arise after March 31, 2019, it will be taxable in the State in which the company whose shares are alienated is resident.

Shailesh Kumar, Director-Direct Taxation, Nangia & Co, a CA firm, said that India was yet to notify the protocol. Once this is done, the provisions of the protocol will become law in India as well, he added.

Indications are that the Protocol will get notified by the Indian side much before March 31, 2017.

Srivats.Kr@thehindu.co.in