Press Trust of India
New Delhi, Sept 3: Seeking to calm the nerves of global investors, the tax department Thursday asked its field officers to keep in abeyance pending assessments of MAT on foreign institutional and portfolio investors prior to April 1 this year and not to recover any outstanding dues.
The Central Board of Direct Taxes (CBDT) has issued a circular following a decision taken by Finance Minister Arun Jaitley on Tuesday to accept the recommendations of the A P Shah Committee report on applicability of Minimum Alternate Tax (MAT) on capital gains made by Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs). Commenting on the development, Minister of State for Finance Jayant Sinha said, “The MAT issue we know, the retrospective aspect of it… So it was very important to get appropriate legal interpretation which we have got now and we are in position to issue the circular and put the MAT issue to rest.” The circular issued Thursday said that it has been decided to carry out appropriate amendment to the Income Tax Act “so as to prescribe that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/permanent establishment in India, for the period prior to April 1, 2015.”
Jaitley had exempted future profits made by foreign funds from levy of MAT in the Budget for 2015-16. “The field authorities are accordingly advised to take into consideration the above position and keep in abeyance, for the time-being, the pending assessment proceedings in cases of FIIs/FPIs… They are further advised not to pursue the recovery of outstanding demands, if any, in such cases,” CBDT said. The government, Jaitley had said on Tuesday, accepted the recommendations of the Shah committee formed to study applicability of MAT on FIIs for a period prior to April 1, 2015, and will amend the I-T Act to clarify that foreign funds will not be subject to MAT.