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The Shah Committee, constituted to go into levy of minimum alternate tax (MAT) on FIIs (foreign institutional investors), will look into all important “legacy” cases, Finance Minister Arun Jaitley said, blaming conflicting judicial rulings for the controversy on the issue that has riled foreign investors.
He also said foreign investors had invited the levy of MAT on themselves by approaching the Authority of Advance Rulings (AAR) in 2012 and since the issue is now stuck in judiciary, the government cannot provide any exemption.
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“The only thing we have done is to exempt (MAT levy for the) future. The past is not of our making. You go to a Tribunal and you invite a verdict against yourself. So, if the 2012 verdict had not been invited, the 2010 verdict would have stood,” said Jaitley.
While the tax department has already sent draft notices totalling Rs 602.83 crore to 68 FIIs for previous years, Jaitley, in Budget 2015-16, exempted them from paying the levy with effect from April 1, 2015.
“There is nothing that this government has done. It is a clear legacy issue. As far as the future is concerned, I have completely put the whole issue to rest,” said Jaitley.
The AAR had, in 2010, ruled that MAT did not apply to foreign companies which did not have an office in India.
But in 2012 the AAR directed Castleton to pay MAT in India on their book profits when it transferred shares from a Mauritius entity to a Singapore entity.
Adding, “On all the important legacy issues, the Justice Shah panel, which comprises experts outside the government, can take a more dispassionate view. If you have only views coming from the revenue department they are too revenue- centric.”
"If you have it coming from the chambers they are too assessee-friendly. So let there be a panel outside which advise the government as to what the correct position appears to be," Jaitley said.
