Returning to India from Singapore with a foreign life policy

Many Indian families in Singapore expect to go home one day, to retire, to run a family business or to be near parents. A foreign life policy bought during the Singapore years can be a good asset to carry back, or an awkward one, and the difference is mostly a matter of dates. This article sets out how India's residence rules, the life insurance exemption, foreign exchange law and foreign asset disclosure fit together for a family returning from Singapore.

PPLI.com is a research publisher, not an insurer, broker or financial adviser, and is not licensed by the Monetary Authority of Singapore. Nothing here is an offer of insurance. To buy a policy, deal with an insurer or adviser licensed or exempted by MAS and check it on the MAS Financial Institutions Directory.

By Eldar Edmond Grady, CEO, PPLI.com. Research checked 27 September 2026. Indian law as at 27 September 2026 (Income-tax Act 2025, tax year 2026-27) and Singapore law as at the same date, for an Indian citizen who owns a life policy issued outside India and returns from Singapore. The examples are hypothetical and state their assumptions.

The Singapore years

While the family lives in Singapore, the Singapore position is simple. A resident individual is exempt on foreign-sourced income received in Singapore other than through a partnership (Income Tax Act 1947 s 13(7A)(b)). Gains on investments are generally not taxable, and IRAS lists "Payouts from insurance policies as they are capital receipts" among them. There is no estate duty for deaths on or after 15 February 2008. A policy saves no Singapore tax; its charges are a cost measured against what it does for the Indian side.

India's side during those years is also light. A non-resident is taxed only on income received or deemed received in India, or accruing or arising in India (Income-tax Act 1961 s 5(2); the 2025 Act keeps the same rule in its s 5). Growth in a foreign portfolio, held directly or inside a policy, is outside Indian tax while the family is non-resident. The difference between the two appears on return.

Residential status on return

India decides residence one tax year at a time, on days of physical presence. The Income Tax Department's guidance for non-residents sets out the tests.

• Resident: in India for 182 days or more in the tax year, or for 60 days or more in the year and 365 days or more in the preceding four years. For an Indian citizen or person of Indian origin visiting India whose Indian income exceeds ₹15 lakh, the 60-day limb becomes 120 days.
• Deemed resident: an Indian citizen whose Indian income exceeds ₹15 lakh and who is not liable to tax in any other country.
• Not ordinarily resident: a resident who was non-resident in 9 of the 10 preceding tax years, or who was in India for 729 days or less in the 7 preceding tax years.

A resident who is not "not ordinarily resident" is resident and ordinarily resident, and is taxed on worldwide income. For a resident but not ordinarily resident individual, income accruing outside India is included "only when it is derived from a business controlled in or a profession set up in India" (2025 Act s 5, read with s 6(13); 1961 Act s 5(1) proviso). Income received in India is taxable whatever the status, so where the money lands matters as much as when.

Worked example: when the window closes

Hypothetical. Meera, an Indian citizen, has lived in Singapore since 2015 and has been non-resident in India every tax year since then, visiting for about 30 days a year. She returns for good on 1 June 2027. Assumptions: 30 days in India in each tax year from 2017-18 to 2026-27, full-time presence from 1 June 2027, no business controlled from India before return.

Meera has two tax years, 1 April 2027 to 31 March 2029, in which foreign income that does not come from an Indian-controlled business is outside Indian tax. From 1 April 2029 her worldwide income is taxable in India. The length of the window depends entirely on the day counts, so a family planning a return should reconstruct them year by year from passports and travel records, not from memory.

Can she keep the policy? Foreign exchange law

Foreign exchange law and tax law are separate questions. Under the Foreign Exchange Management (Insurance) Regulations 2015, "A person resident in India may continue to hold any life insurance policy issued by an insurer outside India when such person was resident outside India" (reg 4(ii), Notification No. 12(R)/2015-RB, 29 December 2015). A policy bought in Singapore while non-resident can therefore be kept after return. The regulation speaks of continuing to hold a policy taken out while resident outside India; it is not a route to buying a new foreign policy after coming home, and topping up or restructuring an existing policy after return should be checked before it is done.

The life insurance exemption, and why investment policies usually fail it

The Income-tax Act 2025 came into force on 1 April 2026 and replaced the 1961 Act. The life insurance exemption that used to sit in s 10(10D) is now in Schedule II, in the entry that carries the same tests (as reproduced in published texts of the 2025 Act). The tests, which the Income Tax Department's text of the old s 10(10D) sets out in full, are:

• Death benefits are exempt. The premium conditions "shall not apply to any sum received on the death of a person".
• For other receipts, the premium must be small relative to the cover. For a policy issued on or after 1 April 2012 there is no exemption if "the premium payable for any of the years during the term of the policy exceeds ten per cent of the actual capital sum assured". For policies issued between 1 April 2003 and 31 March 2012 the limit is twenty per cent.
• Unit-linked policies issued on or after 1 February 2021 lose the exemption if the premium for any year "exceeds two lakh and fifty thousand rupees".
• Other policies issued on or after 1 April 2023 lose it if the premium for any year "exceeds five lakh rupees".

None of these tests asks where the insurer is. Read literally they apply to a policy from a Singapore or other foreign insurer as they do to an Indian one, and a tribunal decision reported in August 2026 (ITAT Delhi, Sarvesh Naidu v. DDIT (Inv.), as reported by professional commentators) held that the old s 10(10D) exemption is not restricted to Indian insurers and applied it to a foreign insurer's policy.

The difficulty is arithmetic. A single-premium investment policy pays one large premium in year one against a death benefit only somewhat above it. A premium of US$2,000,000 against a sum assured of US$2,200,000 is about 91% of the sum assured, far above ten per cent. A unit-linked policy issued after 1 February 2021 with any premium above ₹2.5 lakh fails the separate cap as well. So for the typical wealth policy, a surrender or maturity receipt after the family becomes resident and ordinarily resident will not be exempt. The death benefit stays exempt.

How a non-exempt receipt is taxed depends on which test failed and what kind of policy it is. Under the 1961 Act, unit-linked receipts that lost the exemption only because of the ₹2.5 lakh cap were "chargeable to income-tax under the head 'Capital gains'" (s 45(1B)), and receipts from other policies that failed the ₹5 lakh cap were taxed as income from other sources on "the sum so received as exceeds the aggregate of the premium paid" (s 56(2)(xiii)). A unit-linked policy issued before February 2021 that fails only the ten per cent test fits neither provision neatly. The head of income, the computation and therefore the rate should be settled with an Indian adviser against the 2025 Act's numbering before a surrender is planned.

Worked example: surrender inside or outside the window

Hypothetical, continuing Meera's case. In 2018, while resident in Singapore, she paid a single premium of US$2,000,000 into a unit-linked policy issued by an insurer licensed in Singapore, with a sum assured of US$2,200,000. In 2028 its surrender value is US$3,100,000, a gain of US$1,100,000 over the premium. Assumptions: surrender proceeds are paid into her bank account in Singapore; she runs no business controlled from India that is connected with the policy; for comparison the gain is taken as US$1,100,000 whichever year she surrenders; ignore currency movements.

What "taxable" costs depends on the head of income, as above. If the gain were taxed at the top slab rate with surcharge and cess, which professional summaries put at about 39% under the new regime, the tax would be roughly US$429,000. That is an upper-end illustration, not a computation. The point of the table is simpler: the same gain moves from nil to a significant charge on 1 April 2029, and nothing about the policy changed.

Surrendering inside the window gives up the policy. The family then holds cash, and income on that cash is taxed in the ordinary way once they are resident and ordinarily resident. The alternative is to keep the policy for the death benefit, which stays exempt, and accept that lifetime access after the window is taxable. Which is better depends on age, health, the family's need for the money and what the charges cost. The tax drag calculator and the tax efficiency page help frame the comparison.

Reporting after return: Schedule FA and the Black Money Act

Once the family is resident and ordinarily resident, foreign assets must be reported in Schedule FA of the income tax return. The return forms include a table for a "Foreign Cash Value Insurance Contract or Annuity Contract held (including any beneficial interest) at any time during the calendar year", as professional commentary on the forms describes; the reporting period is the calendar year, not India's April to March tax year. A policy with a surrender value is squarely within it. RNOR years do not require Schedule FA reporting on that commentary, but the first ROR return does.

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 provides a penalty of ₹10 lakh for failing to disclose a foreign asset in the return. Since 1 October 2024, following the Finance (No. 2) Act 2024, that penalty does not apply where the foreign assets other than immovable property total ₹20 lakh or less, according to professional summaries of the amendment. A wealth policy is well above that figure. The same August 2026 tribunal decision was reported as holding that a policy acquired while non-resident was not an "undisclosed" asset for the Black Money Act, which is helpful but is a single reported tribunal decision on its facts.

FAST-DS: a window that closes on 31 December 2026

The Foreign Assets of Small Taxpayers Disclosure Scheme Rules 2026 were notified on 14 August 2026 (Notification No. 114/2026) and the window opened on 16 August 2026. Declarations must be made by 31 December 2026, with values taken at 31 March 2026, according to EY's and KPMG's summaries of the rules. One category covers foreign assets "acquired from income earned while the taxpayer was non-resident ... but which were not reported in tax return", with an aggregate value up to ₹5 crore, on payment of a fixed fee of ₹1 lakh. On the same summaries, a valid declaration gives immunity from further tax, penalty and prosecution under the Black Money Act for the assets declared.

This is aimed at exactly the returning family who came back years ago, kept a policy bought abroad and never put it in Schedule FA. A family still in Singapore does not need the scheme. A family already back in India with an unreported policy should take advice before 31 December 2026.

The India-Singapore tax treaty

The India-Singapore agreement was signed on 24 January 1994 and came into force on 27 May 1994, with protocols in 2005, 2011 and 2017. Two articles matter here.

• Article 4(2) decides residence for an individual who is resident in both countries in the same period: the country of the permanent home first, then the centre of vital interests, then habitual abode, then nationality, then mutual agreement. It can matter in the year of return, when a family may be resident in both.
• Article 23, on other income, says that items "not expressly mentioned in the foregoing Articles of this Agreement may be taxed in accordance with the taxation laws of the respective Contracting States." Where a policy gain falls within it, the treaty does not stop India taxing its own resident.

Because Singapore does not tax the gain in the hands of a resident individual, there is normally no double taxation to relieve. The treaty's main use for a returning family is the residence tie-breaker in the crossover year.

What this means for a life policy

• In Singapore the policy saves no tax. Its value to an Indian family is on the day they go home, and after.
• The death benefit keeps its exemption. A policy held for the next generation travels well.
• Lifetime access is the problem. A single-premium investment policy will usually fail the Schedule II premium tests, so a surrender after the RNOR window can be taxable.
• The RNOR window is the natural time for decisions: surrender, partial surrender, or a decision to hold for the death benefit.
• FEMA lets you keep the policy; it does not make a new foreign policy after return straightforward.
• Reporting starts with the first resident and ordinarily resident return. If that year has passed without disclosure, FAST-DS closes on 31 December 2026.

Questions to take to your adviser

1. What are my exact day counts for each of the last ten tax years, and in which years will I be RNOR?
2. Does my policy meet any of the Schedule II premium tests, and if not, how would a surrender be taxed under the 2025 Act?
3. Should I surrender, partly surrender or hold before my first ROR year, and where should the proceeds be paid?
4. Is anything in my business or professional life likely to be treated as controlled or set up in India during the RNOR years?
5. What does FEMA allow me to do with the policy after return: top-ups, switches, assignment, loans?
6. Have I reported the policy correctly in Schedule FA since becoming ROR, and if not, does FAST-DS fit my case before 31 December 2026?
7. In the year of return, am I resident in both countries, and how does article 4 of the treaty apply?
8. Who are the beneficiaries, and does the policy's beneficiary designation work under the succession law that will apply to my estate?

For a Singapore-regulated product, the insurer or adviser must be licensed or exempted by MAS; check the MAS Financial Institutions Directory. Singapore's own nomination rules apply only to policies from licensed insurers governed by Singapore law and are explained in trust and revocable nominations in Singapore. For families with other ties, see US citizens in Singapore, leaving the UK for Singapore, mainland Chinese families and Australians in Singapore, and the overview on private placement life insurance and Singapore.

Returning to India with a foreign life policy: questions

Can I keep a life policy I bought in Singapore after I return to India?

Yes. The Foreign Exchange Management (Insurance) Regulations 2015, reg 4(ii), allow a person resident in India to continue to hold a life insurance policy issued by an insurer outside India when the person was resident outside India. The regulation covers keeping the policy; new foreign policies or changes after return need separate checking.

What is RNOR status and how long does it last?

Resident but not ordinarily resident. You are RNOR in a tax year if you are resident but were non-resident in 9 of the 10 preceding tax years, or in India for 729 days or less in the 7 preceding tax years. For a long-term non-resident returning full-time it usually lasts about two tax years, but the day counts decide.

Is foreign income taxed while I am RNOR?

Income accruing outside India is included only if it is derived from a business controlled in or a profession set up in India. Income received in India is taxable whatever your status, so proceeds should be received outside India if the aim is to keep a foreign receipt outside Indian tax.

Is the payout from a foreign life policy exempt in India?

A death benefit is exempt. Other receipts are exempt only if the policy meets the premium tests carried from s 10(10D) into Schedule II of the Income-tax Act 2025: premium no more than ten per cent of the actual capital sum assured for policies issued from 1 April 2012, and annual premium caps of ₹2.5 lakh for unit-linked policies issued from 1 February 2021 and ₹5 lakh for others issued from 1 April 2023.

Why would a single-premium policy fail the exemption?

Because one large premium is compared with a sum assured only somewhat higher. A premium of US$2,000,000 against a sum assured of US$2,200,000 is about 91% of the sum assured, far above the ten per cent limit, and a unit-linked policy issued after 1 February 2021 also exceeds the ₹2.5 lakh cap.

Do I have to report the policy in my Indian tax return?

Once you are resident and ordinarily resident, yes. Foreign assets go in Schedule FA, which includes foreign cash value insurance contracts, reported by calendar year. Non-disclosure can attract a ₹10 lakh penalty under the Black Money Act, subject to the ₹20 lakh threshold for foreign assets other than immovable property introduced from 1 October 2024.

What is FAST-DS and who is it for?

The Foreign Assets of Small Taxpayers Disclosure Scheme 2026, open from 16 August to 31 December 2026 according to professional summaries of the rules. One category lets a taxpayer declare foreign assets acquired from income earned while non-resident and not reported, up to ₹5 crore in value, for a fixed fee of ₹1 lakh, with immunity under the Black Money Act.

Does the India-Singapore treaty stop India taxing a policy gain?

Generally not. Article 23 lets each country tax income not dealt with elsewhere in the treaty under its own law, and Singapore does not tax the gain for a resident individual, so there is usually no double tax to relieve. The treaty's residence tie-breaker in article 4 can matter in the year you return.

Sources and authorities

India: Income Tax Department: Income-tax Act 2025 in force from 1 April 2026; Income Tax Department: non-resident FAQs (residence tests); Income-tax Act 1961 s 5; s 10(10D); s 45(1B); s 56(2)(xiii); Income-tax Act 2025 s 5 and Schedule II (unofficial text); Foreign Exchange Management (Insurance) Regulations 2015; India-Singapore DTAA. Professional summaries: EY on FAST-DS 2026; KPMG Flash Alert 2026-224; Taxguru on the Black Money Act amendment; Taxmann on Schedule FA; TheTaxCorp on the ITAT Delhi decision; PwC India tax summary. Singapore: Income Tax Act 1947 s 13; IRAS: gains that are generally not taxable; Estate Duty Act 1929 s 2A; Insurance Act 1966 ss 131 and 132.

Research checked 27 September 2026 against the Indian statutes, regulations and official guidance linked above, and against Singapore primary sources (Singapore Statutes Online, IRAS and MAS). Where a point rests on a professional summary or a reported decision, the text says so. The examples are hypothetical and were checked by script. How we research, check and correct pages is set out in our editorial standards.

PPLI.com is a research publisher and is not licensed by the Monetary Authority of Singapore. This is general information about Indian and Singapore law, not advice on any product and not an offer or invitation to enter into any insurance contract. Policies issued by insurers that are not licensed in Singapore are not covered by the Policy Owners' Protection Scheme or by Singapore statutory nominations.