Tax department asks officials to settle treaty-related MAT claims quick

Says the issue should be sorted withiSays the issue should be sorted within a month of the claims being filedn a month of the claim being filed

The tax department has issued a circular to all Principal Chief Commissioners of Income Tax asking that Minimum Alternative Tax (MAT) claims against tax treaty foreign investors be decided upon within one month.

The levy of Minimum Alternative Tax on foreign investors raised their tax outgo from zero to 20 per cent. Many foreign investors had protested against the same, pointing out that they come from treaty jurisdictions which are exempt from tax.

"It has come to the notice of the Board that several Foreign Institutional Investors receiving income from transactions in securities claim such income as exempt from tax under the Income Tax Act, 1961 ('the Act') by availing benefit provided in the Double Taxation Avoidance Agreements ('DTAAs') signed between India and their respective countries of residence," said the 24th April note shared by a tax consultant.

"..it has been decided that in all cases of Foreign Institutional Investors seeking treaty benefits under the provisions of respective DTAAs, decision may be taken on such claims within one month from the date such claim is filed," it said.

Sunil Shah, Partner, Deloitte Haskins & Sells LLP in an emailed statement said that the move is a positive.

"This is a welcome step which will clear the uncertainty for some categories of FPIs(Foreign Portfolio Investors). For those who do not have treaty protection, the controversy would continue till it is settled either by the government or by the courts," he said.

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