Govt may come out with circular on relief to FIIs on minimum alternate tax
The Revenue Department may soon come out with a circular on providing relief to FIIs from the minimum alternate tax (MAT) with retrospective effect.
“Government is likely to soon issue circular giving relief to FIIs on MAT prior to April 1,” a senior Finance Ministry official said. The government-appointed AP Shah committee too has recommended that there was no case for imposing the controversial MAT on FIIs retrospectively.
The Committee was appointed by the government to go into the question of levy of MAT on capital gains made by foreign institutional investors (FIIs). It submitted its report to the Finance Minister Arun Jaitley on July 24.
The panel has reportedly recommended that there was no basis for levy of MAT on FIIs for period prior to April 1, 2015.
Official further said that the government may amend Income Tax law in winter or budget session. The official also said that the Revenue Department was also planning to come out with the roadmap to give effect to the proposal of reducing corporate tax from 30 per cent to 25 per cent over a period of 4 years.
The roadmap will deal with the withdrawal of tax exemptions which will be gradually eliminated. The official also said that the Department will issue the second set of FAQs on black money law in the next 4-5 days.
The 90-day compliance window for declaring the unaccounted overseas wealth ends on September 30. Under the compliance window, persons having unaccounted overseas assets can disclose their wealth by paying 60% tax and penalty and come clean.
Those who will not take advantage of the compliance window will be slapped with a tax and penalty of 120%. They will also be prosecuted under the black money law which entails a punishment of up to 10 years.
As regards to MAT, the government had previously stated that FIIs can use tax treaties to reject demands on past capital gains. FIIs domiciled in countries that have signed double taxation avoidance treaties with India are exempt from these levies. Foreign investors have invested about US $20 billion in Indian stocks in the past year and US $28 billion in bonds.
