A government-appointed panel submitted its report on minimum alternate tax (MAT) on foreign institutional investors (FIIs) on Friday, but the finance ministry did not disclose its contents, adding to uncertainties over the controversial levy that had rattled investors.
The high-level Justice AP Shah Committee submitted a 66-page report to the government on the applicability of MAT on FIIs. The government had tasked the Shah panel, formed in May, to look into the applicability of MAT, a kind of tax on capital gains made by FIIs.
A string of tax notices to FIIs in March had spooked markets, which were hit by anxieties over retrospective taxation of foreign funds.
The tax department had issued notices to 68 FIIs seeking Rs 602 crore as unpaid MAT over the past years.
Finance minister Arun Jaitley in budget 2015-16 proposed to scrap MAT.
FIIs are hoping that the government will waive MAT prior to April 2015.
“It’s a 66-page report. We have received responses from industry, chartered accountant firms, Central Board of direct Taxes and leading advocates,” Shah said after submitting the report to Jaitley.
“The term of reference was MAT on FIIs. We answered that,” he added, but refused to give specific details.
Later, while speaking to reporters, revenue secretary Shaktikanta Das said: “The government will examine and consider the report. The government will take a decision soon.”
The government would decide in the next 10 days its position on the legal dispute with foreign investors over the controversial tax, he said, adding, the report will not be made public before the Centre examines and accepts it.
In May, the income-tax department asked all its field officers not to undertake any “coercive action” for recovery of demand already raised on foreign companies by invoking MAT provisions.
Former chief economic adviser Ashok Lahiri and chartered accountant Girish Ahuja were the other two member of the panel.
The tax notices for retrospective imposition of MAT on foreign investors had sparked a legal row. The Supreme Court is due to hold next month a hearing about the legality of the tax.
The Supreme Court is hearing a petition filed by Castleton on the levy of MAT, while there is also another case on the same pending in the Bombay High Court. “The Supreme Court hearing is still about 10-11 days away. We have time in between. We will go through the report. The course of action which the government will follow with regard to the Supreme Court hearing on August 4 can be decided in the next 10 days,” Das said.