You are here: Home » Budget » News » Markets
Business Standard

Budget 2015: No MAT for FIIs, says Jaitley

GAAR too deferred by two years

Sachin P Mampatta  |  Mumbai 

The latest Union spelt relief for foreign portfolio investors with two unpopular tax moves being scuttled or deferred.

Finance Minister Arun Jaitley said that Minimum Alternative Tax will not apply to foreign investors. He has also said that General Anti Avoidance Rules (GAAR) would be deferred by two years.

The GAAR provision expanded the powers of tax authorities. The Minimum Alternative Tax was originally brought into play to bring into the tax net large domestic corporate who did not pay taxes by making use of various incentive schemes. The tax authorities had recently sent communications under the provision to foreign portfolio investors, asking them to explain why the provision should not apply to them.

Read our full coverage on Union Budget

The MAT provision would have raised their long term capital gains tax from zero under the current regime to around 20 per cent. The net impact of would have run into tax liabilities for thousands of foreign investors.

“No MAT for FIIs is a very welcome step and relaxes the uncertainty created recently by the tax notices. Also welcome clarification that there will be no PE on presence of fund managers,” said Rajesh H. Gandhi, Partner – Tax at Deloitte Haskins & Sells.

PE or Permanent Establishment refers to the presence of an entity in the country which makes it liable to taxation. This would not apply to asset managers whose fund managers are located in the country, said the Finance Minister.

Foreign investors currently hold over 40 per cent of India’s free float in equity Free float refers to shares available for public shareholding.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sat, February 28 2015. 12:43 IST