Home / Business / Money / MAT amt only Rs 6-7Kcr; 70-80% cases may get relief: Srcs

MAT amt only Rs 6-7Kcr; 70-80% cases may get relief: Srcs

The case dates to a long-standing demand by the Indian government that foreign investors pay alternate tax but it shot into prominence after news reports quoted Finance Minister Arun Jaitley as saying the amount involved could be upwards of Rs 40,000 crore.

India Business Hour

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In what would be an anti-climactic turn of events in a row that has raised concerns over predictability of India’s tax system, the government’s willingness to untangle litigious tax issues and potentially led to the recent FII-led stock market decline, it has emerged that the scale of the minimum alternate tax (MAT) issue may be only Rs 6000-7000 crore, and not more than Rs 40,000 crore as was being reported earlier.

Further, sources have told CNBC-TV18 that 70-80 percent of cases — in which foreign investors have received tax demand seeking payment of MAT — will likely be eligible for relief from the tax demand under provisions of the double taxation avoidance agreements (DTAA) India has signed with various countries.

The case dates to a long-standing demand by the Indian government that foreign investors pay alternate tax but it shot into prominence after news reports quoted Finance Minister Arun Jaitley as saying the amount involved could be upwards of Rs 40,000 crore.

Finance minister for state Jayant Sinha told Parliament today that assessment of about Rs 603 core has been completed for 68 entities while it was pending for several other cases where notices have been issued.

Earlier, the government had done away with the MAT requirement for FPIs prospectively (fiscal year 2015-16 onwards) but it had refused to intervene in the matter arising out of past claims, citing that it would be infringing on judicial ground – as a tribunal has already struck down FPIs’ appeal against the notices.

But if the MAT amount turns out to be lower than what was talked about earlier, it would be a case that has been handled poorly by the government “from the communication standpoint”, corporate lawyer Ashvin Parekh told CNBC-TV18.

“All along, FIIs have clearly indicated they are looking at investments in India but they are looking for long term to prevail. Any measure that affects their investment expectations due to new tax measures disturbs the whole thing.”

Parekh said that further clarity on the scale of the case will emerge as and when further notices are issued.

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