Foreign institutional investors will not face minimum alternate tax, or MAT, in India. The Narendra Modi government has decided to accept a high-level panel's report to bring down curtains on the acrimonious issue that had undermined its promise of a stable and non-adversarial tax regime. The government will soon issue a directive to its officials not to pursue MAT demand on foreign institutional investors (FIIs) or foreign portfolio investors (FPIs) for the period before April 1, pending legislative change, the finance ministry said in a statement on Tuesday.
The development will provide some support to the Indian markets facing sharp selloff because of a combination of slowdown in China, impending interest rate increase in the US and slower than expected GDP growth in the first quarter. The government clarification, backed by recommendations of the AP Shah committee, will be followed up with amendments to Section 115 JB of the Income Tax Act as early as in the winter session of Parliament to close the issue for good. “We would be bringing out that amendment in the statute,“ finance minister Arun Jaitley said in a late evening press conference on Tuesday.“Meanwhile, pending such an amendment, all the field formations are conveyed by the way of a circular that this is the decision of the government and they will have to hold their hands and not make further orders in the matters,“ he said.
This means the Rs.602 crore demand notice sent to 66 FIIs FPIs will now be on hold. “All the notices that have already been issued will now be interpreted in accordance with the pre April 1, 2015, law. So what applies post April 1, 2015, will also apply pre April 1, 2015,“ Jaitley said.
He said necessary amendments will be made in the next session of Parliament.
The budget for FY16 had made amendments to provide that the levy will not apply after April 1, 2015, triggering a raft of tax demands from assessing officers for the period before that, reigniting the charge of tax terrorism against Indian tax authorities.
This prompted the government to set up a committee headed by retired Justice AP Shah to take a look at MAT. The committee reasoned that Section 115JB applies to firms governed by the companies law and should not apply to FIIs FPIs that do not have presence here and are not covered by the law.
The development will provide some support to the Indian markets facing sharp selloff because of a combination of slowdown in China, impending interest rate increase in the US and slower than expected GDP growth in the first quarter. The government clarification, backed by recommendations of the AP Shah committee, will be followed up with amendments to Section 115 JB of the Income Tax Act as early as in the winter session of Parliament to close the issue for good. “We would be bringing out that amendment in the statute,“ finance minister Arun Jaitley said in a late evening press conference on Tuesday.“Meanwhile, pending such an amendment, all the field formations are conveyed by the way of a circular that this is the decision of the government and they will have to hold their hands and not make further orders in the matters,“ he said.
This means the Rs.602 crore demand notice sent to 66 FIIs FPIs will now be on hold. “All the notices that have already been issued will now be interpreted in accordance with the pre April 1, 2015, law. So what applies post April 1, 2015, will also apply pre April 1, 2015,“ Jaitley said.
He said necessary amendments will be made in the next session of Parliament.
The budget for FY16 had made amendments to provide that the levy will not apply after April 1, 2015, triggering a raft of tax demands from assessing officers for the period before that, reigniting the charge of tax terrorism against Indian tax authorities.
This prompted the government to set up a committee headed by retired Justice AP Shah to take a look at MAT. The committee reasoned that Section 115JB applies to firms governed by the companies law and should not apply to FIIs FPIs that do not have presence here and are not covered by the law.
No comments:
Post a Comment