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Relief for FIIs as income-tax department clarifies rules on defective returns

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In a reprieve to foreign portfolio investors (FPIs), the income-tax department has clarified the circumstances in which the returns filed by these institutions will not be treated as defective.
A number of notices of defective returns were issued under section 139(9) of the I-T Act to these investors who had not filed their balance sheet and profit and loss statement.
A return is classified as defective when it excludes key information.
In a statement issued on Thursday, the central board of direct taxes (CBDT) clarified that these returns will not be treated as defective in cases where such institutions are registered with the Securities and Exchange Board of India (Sebi) and have no permanent establishment or place of business in India and have made the necessary disclosures about their business income.
This follows the government’s decision to accept the A.P. Shah panel’s report that had said that FPIs with no permanent establishment in India are not liable to pay minimum alternate tax in the country.
“All such cases, where the Sebi registration number has been provided by the FIIs/FPIs in the return for AY (assessment year) 2015-16 are being taken up for processing at CPC (central processing centre), Bengaluru. For previous assessment years where the above information is not available in the income-tax return, FII/FPI may provide such details in their online response on the e-filing portal of the income-tax department to the previously issued notice u/s 139(9) of the Income-Tax Act,” the tax department said.
HT Mint, New Delhi, 11th Dec. 2015

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