Skip to main content

Don’t pursue MAT cases against FIIs: CBDT to field staff

By
The Central Board of Direct Taxes (CBDT) has issued instructions to field officers not to raise any fresh demand and keep in abeyance the notices sent to foreign institutional investors ( FIIs) on minimum alternate tax ( MAT) “ for the time being”. This follows the government accepting the A P Shah panel’s recommendation of doing away with MAT cases against FIIs prior to April 1 this year.

The Budget has already announced there will not be any MAT on FIIs.

As such, there will not be any follow- up action on the 68 notices sent to FIIs on past MAT cases, with a combined tax dispute amount of Rs.603 crore. Also, there won’t be any further notices in this regard.

The potential tax liability of all past MAT cases on FIIs was pegged at Rs.40,000 crore by the finance ministry.

The CBDT’s directive does away with uncertainty in this regard between now and the day when amendments to the I- T Act are carried out, based on the Shah panel’s report. The government hopes to table the amendments in the winter session of Parliament.

The CBDT has asked officers to take note of the fact that it has been decided to carry out appropriate amendments to the income tax Act “so as to prescribe that MAT provisions will not be applicable to FIIs or foreign portfolio investors ( FPIs) not having a place of business/ permanent establishment in India for the period prior to April 1, 2015.

“Accordingly, the field authorities are 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.” On Tuesday, Finance Minister Arun Jaitley had said the government had accepted the recommendations of the Shah panel, set up to study the issue of MAT on FIIs, adding the income tax Act would be amended to clarify foreign funds won’t be subject to MAT.

The A P Shah panel sought the government either ask the CBDT to issue a circular that MAT wasn’t applicable to FIIs and FPIs prior to April 1 2015 or amend the relevant section of the I- T Act.

“FIIs are mostly open- ended investment funds, which permit their investors to enter and exit daily, based on the NAV ( net asset value) of the fund, unanticipated tax liability (or the fear thereof) relating to previous years, which would have to be borne by the current investors, maybe asufficient trigger for the investors


There will not be any follow- up action on the 68 notices sent to FIIs on past MAT cases, with a combined tax dispute amount of Rs.603 crore.

Business Standard, New Delhi, 04 September 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more