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FIIs cannot expect retrospective exemption: Revenue Secy

Government is at loggerheads with a clutch of foreign investors over levying the minimum alternate tax (MAT). The Centre in the Budget had given MAT exemption prospectively. And speaking to CNBC-TV18’s Sapna Das, Revenue Secretary Shaktikanta Das made it clear that FIIs cannot expect retrospective exemption.

Government is at loggerheads with a clutch of foreign investors over levying the minimum alternate tax (MAT). The Centre in the Budget had given MAT exemption prospectively. Speaking to CNBC-TV18’s Sapna Das, Revenue Secretary Shaktikanta Das made it clear that FIIs cannot expect retrospective exemption.

Below is verbatim transcript of the interview:  

Q: What are the FII concerns regarding taxation?  

A: The FIIs are requesting an exemption for a prior period. It amounts to asking for a retrospective exemption. Well, nobody likes to pay tax, if there is a tax liability somebody will be concerned but please understand in the proper perspective.

The FIIs approach the government that they have a problem, the government addresses that problem, provided them exemption naturally with prospective effect. By doing so, government has isolated the past problem and government has segregated the future problem.

If you are aggrieved with a particular judicial order, you have to go and appeal to the next higher judicial forum. You cannot expect the government to come in and make an intervention through an executive action or initiate a process of a legislative action to come in between a judicial pronouncement; and a pronouncement which is in favour of the revenue.

Q: Would there be a treaty protection that will be available for investors under the MAT notice especially if you talk about important treaties like Mauritius, like Singapore which also see a huge amount of investment coming into the Indian market? There is a certain regime that the government has already agreed to on that front, so anything on that?

A: We have to look at individual treaties, we will have to look at the kind of investments the nature of investments the FIIs have to make. So, I do not want to make a sweeping remark here but having said that, if tax is paid here, the assessee should be able to get equivalent credit in his own country wherever we have double taxation avoidance agreement. So, you pay the tax here and you can ask for tax credit in your own country.

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