Panel set up to review MAT demand on FIIs

Shah panel to look into pre-April demands

The finance ministry on Wednesday constituted a committee of three members to look into the applicability of Minimum Alternate Tax (MAT) on foreign institutional investors (FIIs) before April 2015.

The committee is headed by A P Shah, chairman of the Law Commission of India. The other members are Ashok Lahiri, former chief economic advisor and Girish Ahuja, former associate professor of commerce at Shri Ram College of Commerce, University of Delhi.

The government has asked the committee to report as soon as possible.

“To begin with, the committee will examine the matter relating to levy of MAT on FIIs for the period prior to April 1, 2015. The committee will also examine all the related legal provisions, judicial/quasi-judicial pronouncements and other such relevant aspects as it may consider appropriate,” the ministry said in a statement.

The government was caught on the wrong foot after the income tax department had sent notices to FIIs making MAT demands for the period between 2007-08 and 2014-15. The total tax demand as informed to Parliament was  Rs 602 crore.

The finance ministry has asked tax officers to not send any fresh notices making tax demand till the committee gives  its report.

The committee on direct tax matters would also look into other judicial tax matters which  would be announced at a later stage.

The committee would form its opinion on the legal aspects of applicability of MAT on FIIs. It would interact with various stakeholders and might also have discussions with officers of the Department of Revenue, including the Central Board of Direct Taxes.