Union Government accepts A P Shah panel report on MAT
Union Government has accepted Justice AP Shah Committee report on the Minimum Alternative Tax (MAT) on foreign institutional investors (FIIs).
By accepting the recommendations, Government will not impose levy on FIIs prior to 1st April 2015 i.e. retrospectively. In the meantime, government has ordered Central Board of Direct Taxation (CBDT) field officers not to pursue cases against FIIs on the issues related to MAT.
- There is no legal basis for levying 20 per cent MAT on past capital gains of FIIs.
- Amend Section 115 JB the Income Tax Act to clarify the issue with regard to levy of MAT on FIIs.
- MAT provisions would not be applicable to FIIs that don’t have a place of business or permanent establishment in India.
Implication: This recommendation is considered as a big relief to FIIs as government had exempted them from MAT starting April 1, 2015 in the Union Budget for 2015-16 but had not made the clarification retrospective imposition.
- Union Finance Ministry in May 2015 had appointed this 3 member Committee on the issue of levying MAT on capital gains made by FIIs retrospectively.
- Members of Committee: A P Shah (Chairman), Dr. Girish Ahuja and Dr. Ashok Lahiri.
- The committee was constituted after the tax department had sent legal notices to 68 FIIs demanding around six hundred crore rupees as MAT dues of previous years. This had raked up a MAT controversy within FIIs and they had moved to court challenging this tax imposition.
Categories: Economy & Banking Current Affairs