The government on Friday said that it will “soon” decide whether the foreign institutional investors (FIIs) would have to pay the minimum alternate tax (MAT) on the capital gains made by them up to March 31, 2015, after considering the Justice AP Shah panel report, which was submitted to finance minister Arun Jaitley on Friday.
The much-awaited 66-page report was “unanimously adopted” by the three-member committee. “The recommendations of the committee are very important and they carry a lot of weight. The government will definitely give due weightage to them while taking a view on the matter. We will take a view on how these tax disputes will be handled,” revenue secretary Shaktikanta Das said even as he refused to make public the contents of the report. The secretary further said that a few other issues are also likely to be referred to the committee in due course.
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The report comes weeks ahead of the Supreme Court’s hearing in the Castleton case, where the Advance Authority for Rulings had turned down MAT exemption plea despite the fact that the it did not have a permanent establishment in India. The Authority had taken a view that it was irrelevant whether the investor was a domestic or foreign company for the purpose of MAT.
Rajesh H Gandhi, partner, Deloitte Haskins and Sells, said, “The anxiety continues for FPIs and the capital market as the government has delayed the release of the committee’s report… It is expected that the government will rely on the committee’s report when the SC hears Castleton early next month. If the report is favourable to the FPIs, the government might probably not press for levy of MAT before the SC.”
The Shah panel was set up following an uproar of the global investors when the income tax department sent notices to 68 FIIs demanding Rs 602.83 crore for paying up MAT on the book profits made by them up to March 31, 2015. Following the huge uproar, the government formed the panel and the income tax department directed its officials to put on hold issuance of fresh notices and any further assessments on levy of this tax on FIIs.