Centre accepts Shah Panel report on Minimum Alternate Tax(update)

Union Finance Minister Arun Jaitley on Tuesday stated that the Government has accepted Justice AP Shah Committee report on applicability of Minimum Alternate Tax (MAT) on foreign investors.

Addressing a press conference, Jaitley said: "Today I have accepted on the recommendation of CBDT and department of revenue, the report of Justice AP Shah dated August 25. This report will also be made public very soon."

"Broadly, the report says that from time of statutory inquiry, the intention appeared to be from the structure of the law, that the Minimum Alternate Tax (MAT) was not leviable on FIIs. The reasoning given in the advance ruling order gave a contrary view, which is pending before the Supreme Court," he added.

Describing the report further, the Finance minister stated that Justice AP Shah panel had submitted its report a week ago.

"It had been constituted by the government with regard to levy of MAT on FIIs prior to 2015. The government had put an expert panel into this issue. In the department of revenue and the CBDT, it was considered at length and there was some issue concerned with the line of reasoning in the report," he said.

"Now, instead of allowing the matter to drag on and ask the committee to give in writing, we followed an expeditious procedure, where a meeting was held, where I, along with revenue secretary, CBDT members and all members of Shah Panel were present. The committee submitted the final draft on August 25. The recommendation of Justice Shah Panel have clarified that what applies post-April 1, 2015 also applies to pre-April 1, 2015," he added.

"In the winter session of the Parliament, we will be able to bring the amendment expeditiously," Jaitley said.

A Committee on Direct Tax matters, chaired by Justice A.P. Shah, was constituted with the initial mandate to examine the matter relating to levy of MAT on FIIs/FPIs for the period prior to 01.04.2015. The Committee has submitted its final report on applicability of MAT on FIIs/FPIs for the period prior to 01.04.2015 to the Government on 25.08.2015.

The Committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs. Alternatively, the Committee has suggested that a Circular may be issued clarifying the inapplicability of MAT provisions to FIIs/FPIs.

The Government has accepted the recommendation of the Committee to clarify their applicability of MAT to FIIs/FPIs and has decided that an appropriate amendment to the Income-tax Act will be carried out.