In what could come as a relief for Foreign Portfolio Investors (FPIs), the government has indicated that it will not apply Minimum Alternative Tax (MAT) on them even for transactions before April 1, 2015.
“The AP Shah Committee has recommended granting relief to such investors on MAT levy prior to April 1, 2015. The government is favourably considering the committee’s recommendation,” a senior government official said.
Though this news came late in the afternoon, it had some impact on the stock market as the BSE Sensex recovered a bit before closing at 27,366, restricting the loss to 242 points from over 300 points earlier. .
The Finance Act, 2015 prescribed exempting MAT on FIIs or FPIs from April 1. However, the controversy began when tax authorities issued notices to about 100 FPIs with a demand to pay MAT on ‘untaxed gains’ made by them in the Indian markets over the past years.
Govt view on report soon Earlier in the day, Revenue Secretary Shaktikanta Das said the Centre would soon firm up its views on the Shah panel report.
“We are yet to take a view,” Das told BusinessLine on Friday.
Rajesh H Gandhi, Partner with Deloitte Haskins & Sells LLP, said when the Castleton case comes up for hearing, the government’s position before the Supreme Court could be that FPIs should not be liable to MAT.
Sameer Gupta, National leader for tax financial services, EY, felt that the AP Shah Committee report is a crucial piece in the MAT saga for the FPIs. The possibility of not levying MAT prior to April 1, 2015 according to him, ought to calm the frayed nerves and work to restore investor sentiment.