FIIs should go to courts against tax demand: Revenue Secy

Shaktikanta Das sticks to Rs 40,000 cr tax demand, says FIIs had lost appeal at AAR against 20% MAT on capital gains made by them

Refusing to relent on a Rs 40,000 crore tax demand on foreign portfolio investors, the government today said FIIs should look at courts to appeal against the tax rather than seek retrospective waiver.

Revenue Secretary Shaktikanta Das in an interview to PTI said FIIs had lost an appeal at the Authority for Advance Ruling (AAR) against levy of 20 per cent Minimum Alternate tax (MAT) on capital gains they made in years through March 31.

"If you are not satisfied with a particular judicial pronouncement, the answer is to go and appeal to a next higher judicial forum," he said.

Asked whether FIIs can be provided any relief after a ruling by AAR, Das said: "The answer is not in between rushing to the government and expecting the government to intervene through executive action or initiating a legislative measure to provide retrospective exemption".

Das, however, refused to comment on the total tax demand raised on FIIs or the number of foreign investors involved.

Finance Minister Arun Jaitley, who had previously stated that India was not a tax haven and legitimate dues from foreign investors will be pursued, had earlier this week said that "the amount involved is Rs 40,000 crore."

Yesterday in Washington, Jaitley said: "It may not be possible for any government after a court verdict, which is a transient court verdict, which is still subject to appeals, to intervene in those particular matters."

Das said the Foreign Institutional Investors (FIIs) had approached the government with certain problems before the Budget and hence they have been exempted from paying MAT on capital gains from the current fiscal, he said.

"The FIIs approached the government with certain difficulty in paying MAT. Considering that difficulty government provided the exemption. And naturally the exemption has to be given prospectively. And government has done it...

"So their future business is fully secured and is not affected by the issue of MAT," he said.

Stressing that the government would not bring in any retrospective changes to tax laws, Das said: "The government has time and again said that this government is not for retrospectivity in matters of taxation, it applies to new levies, it also applies to issues relating to exemptions.