Situs rule

The situs rule identifies the jurisdiction in which an asset is considered to be located for tax purposes. Its purpose is to clarify which country has the authority to levy tax on income or gains connected with that asset. The place of situs varies depending on the type of property. Immovable property is tied to its physical location. Shares are normally associated with the country where the issuing company is incorporated. Rights in intangible property are connected to the place where those rights are legally recognized or registered. Bank deposits are generally linked to the institution or branch where the account is held.

Example: Suppose an Indian resident owns a residential property in London and also holds shares in a Singapore-incorporated company. The property would fall under UK tax jurisdiction because real estate is taxed where it is situated. The shares, on the other hand, would typically be treated as located in Singapore, and any taxability of gains would depend on Singapore’s domestic rules and treaty provisions.