The continuous slump in the stock market with fleeing foreign investors on issue of payment of Minimum Alternate Tax (MAT), has led the Finance Minister Arun Jaitley announce a high level committee, which will give its first recommendations on the issue of imposition of MAT on foreign investors. Elaborating on the tax policies, the Finance Minister expressed the government's commitment to provide certainty to the tax regime to attract investments, both domestic and foreign.
A high-level committee, headed by Justice A P Shah, the chairman of the Law Commission, will look into the controversial issue of payment of Minimum Alternate Tax by FIIs. The committee would also look into few other tax issues, which are essentially legacy issues.
Arun Jaitley speaking in parliament said that the government was committed to three principles: certainty of taxation, avoidance of retroactive taxation and enabling both domestic and foreign investment. “We will ensure that these principles are adhered to in letter and spirit”. Further replying to the debate, the FM said that the Committee is requested to give its recommendation of the specific issues of MAT on FIIs expeditiously. The Government will consider the recommendation of the committee and take an appropriate decision as early as possible.
Following a decision of the Authority of Advance Ruling (AAR), Income Tax department had slapped notices on 68 foreign portfolio investors (FPI) saying they have to pay 20 percent MAT totalling Rs 602.83 crore on untaxed capital gains made by them over the past three years. Some foreign funds have appealed against the ruling in the Supreme Court. UK-based Aberdeen Asset Management has challenged the MAT claim in the Bombay High Court.
