New Delhi, Sept 1: In a move aimed at settling thorny issue that had recently shaken investors confidence in Indian stock markets, government has decided to waive the retrospective imposition of minimum alternative tax (MAT) on foreign institutional investors (FIIs).
Union Finance Minister Arun Jaitley on Tuesday said the government has accepted Justice AP Shah Committee report on applicability of MAT on foreign investors.
Addressing a press conference, Jaitley said: “Today I have accepted on the recommendation of CBDT and department of revenue, the report of Justice AP Shah dated August 25. This report will also be made public very soon.”
The Finance Minister further said: “Broadly, the report says that from time of statutory inquiry, the intention appeared to be from the structure of the law, that the minimum alternate tax was not leviable on FIIs. The reasoning given in the advance ruling order gave a contrary view, which is pending before the Supreme Court.”
Describing the report further, he said that Justice AP Shah panel had submitted its report a week ago, adding “It had been constituted by the government with regard to levy of MAT on FIIs prior to 2015.”
“The government had put an expert panel into this issue. In the department of revenue and the CBDT, it was considered at length and there was some issue concerned with the line of reasoning in the report,” he said.
“Now, instead of allowing the matter to drag on and ask the committee to give in writing, we followed an expeditious procedure, where a meeting was held, where I, along with revenue secretary, CBDT members and all members of Shah Panel were present. The committee submitted the final draft on August 25. The recommendation of Justice Shah Panel have clarified that what applies post-April 1, 2015 also applies to pre-April 1, 2015,” he added.
“In the winter session of the Parliament, we will be able to bring the amendment expeditiously,” Jaitley said.
A Committee on Direct Tax matters, chaired by Justice AP Shah, was constituted with the initial mandate to examine the matter relating to levy of MAT on FIIs/FPIs for the period prior to April 1, 2015. The committee has submitted its final report on applicability of MAT on FIIs/FPIs for the period prior to April 1, 2015 to the government on Aug 25, 2015.
The Committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs. Alternatively, the Committee has suggested that a Circular may be issued clarifying the inapplicability of MAT provisions to FIIs/FPIs.
(With Agency Inputs)