To pacify FIIs, Govt refers MAT issue to A P Shah panel

Seeking to soothe the nerves of foreign investors, Finance Minister Arun Jaitley on Thursday announced that a high-level committee will look into the controversial issue of payment of Minimum Alternate Tax (MAT) by FIIs. “We have decided to refer this matter (of payment of MAT by FIIs) as well as few other tax issues, which are essentially legacy issues, to a committee headed by justice A P Shah, the chairman of the Law Commission.

“The Committee is requested to give its recommendation of the specific issues of MAT on FIIs expeditiously. The Government will consider the recommendation of the committee and take an appropriate decision as early as possible,” he said while replying to a debate on the Finance Bill in the Rajya Sabha. 

Following a decision of the Authority of Advance Ruling (AAR), Income Tax department slapped 68 notices on foreign portfolio investors saying they have to pay 20 per cent MAT totalling Rs 602.83 crore on untaxed capital gains made by them over the past three years. Some FPIs have approached the courts against the tax department.

Rejecting the demand for relaxing the norms for quoting of PAN for payments above Rs 1 lakh, Jaitley said the government has already issued 21 crore PAN cards and stressed “dealing in black money is not a fundamental right.” Moreover, he said, the government plans to launch a big campaign to expeditiously issue PAN cards.

The Upper House later returned the Bill, already passed by the Lok Sabh, thus completing the budgetary exercise for 2015-16.