Skip to main content

CBDT tells field officers to finish MAT assessments for FIIs

By
To end uncertainty over applicability of Minimum Alternate Tax (MAT) on foreign institutional investors (FIIs) and foreign companies, the Central Board of Direct Taxes (CBDT) on Wednesday asked its field officers to complete the pending assessments in light of the directions issued regarding inapplicability of the tax liability on such entities.
“The field authorities are hereby advised that pending assessments involving applicability of MAT on foreign companies (including FIIs and FPIs) should be completed in accordance with the decision of the government,” CBDT said in an instruction to field formations.
The government had earlier decided that Section 115JB of Income Tax with regard to levy of MAT will not apply to foreign companies, FIIs and foreign portfolio investors (FPIs) and a requisite amendment would be made in the Finance Bill 2016.
It was decided that MAT will not apply to companies prior to April 1, 2015. The government had already in last Budget clarified that MAT would not be levied on foreign companies, FIIs and FPIs from April 1, 2015.
KPMG (India) Head of Tax Girish Vanvari said the instruction would put the tax controversy on the MAT issue at rest and bring in the much needed certainty to the foreign investors.
"This is also a very positive signal to the investor community as the government is promptly and transparently trying to put the controversial tax issues at rest," he said.
The tax department, earlier this year, faced a huge controversy over applicability of MAT on capital gains made by foreign portfolio investors/foreign institutional investors in period prior to April 1. The issues spooked markets with FIIs threatening to pull out.
The government managed to salvage the situation through a committee under Law Commission chairman A P Shah which recommended non applicability of MAT for previous years.
The government had earlier said that the I-T Act will be amended with retrospective effect to exempt overseas companies, which do not have a permanent establishment in India, from paying MAT.
Foreign companies, irrespective of whether they belong to a country with which India has a Double Taxation Avoidance Agreement (DTAA), were exempted from MAT on profits from April 2001 if they do not have a place of business in India.
Business Standard, New Delhi, 24th Dec. 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

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

By
  Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...
Post a Comment
Read more