The Justice Shah Committee, constituted to go into levy of MAT on FIIs, 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 that foreign investors had invited the levy of Minimum Alternate Tax (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.
"The only thing we have done is to exempt (MAT levy for) 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," Jaitley told PTI in an interview.
While the tax department has already sent draft notices totalling Rs 602.83 crore to 68 Foreign Institutional Investors
(FIIs) for previous years, Jaitley, in Budget 2015-16, has 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," Jaitley said.
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.
"On all the important legacy issues, the Justice Shah panel, which comprises experts outside the government can take a more dispassionate view. Because if u 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.
Outlining the future course of action, Jaitley said the effort would be to implement the announcements made in the budget. "Some of which may need a legislation, some need only executive action and the direction will be the same as indicated in Budget," he said.
Besides, he added the government would also focus on spending in rural infrastructure, irrigation and social sector schemes.
"The important challenges would be to roll out our expenditure in infrastructure which we expanded and that will be very critical for growth in manufacturing... We are all anxiously waiting for June 2 (for RBI policy)", he added.
On the impact of projected below-normal monsoon on the farm sector, Jaitley said that he would not like to hazard a guess but stressed that the government would continue to focus on increasing spending or rural infrastructure and irrigation schemes.
The quantum of expenditure, he added, would go up with increase in growth and better realisation of revenue.
"There are a lot of rain-fed areas... our future expenditures as the growth goes to 8 per cent and revenues keep increasing this year and next year, (will be on) rural infrastructure and irrigation. These are two areas of huge future investment," the minister said.
The other effort would be to attract more foreign direct investment to boost development and growth, Jaitley said.
"Except the sectors which are sensitive to national economy or national interest, in today's context I have always regarded it as additionality of resource. And therefore I am quite sure that the DIPP, the nodal department, would look at it with a positive view", he added.
When asked as to when the A P Shah committee on tax issues would be set up, Jaitley said: "the terms of reference would come in the next couple of days".
Jaitley had last week announced setting up of the panel to look into the dues of MAT on FIIs, besides other legacy tax issues.
Replying questions on the Income Tax Return (ITR) forms, the Minister said that the Central Board of Direct Taxes (CBDT) was working over it and a simplified form would be issued shortly.
"We will try to simplify it to the largest extent possible," Jaitley said.
Following the controversy over the new ITR forms which sought details of bank accounts and foreign visits, the revenue department had announced putting them on hold.
The salaried individuals and those persons who do not have business/professional income are required to file income tax returns in either ITR-1 or ITR-2 by July 31.
The tax department also held consultations with industry chambers seeking their views for simplification of the ITR forms.
Answering questions on the controversy with regard to the setting up of a Public Debt Management Agency (PDMA) outside the Reserve Bank, Finance Secretary Rajiv Mehrishi said that there was a conflict of interest in PDMA and monetary policy committee.
"...there's conflict of interest. Basically the PDMA and the monetary policy committee are two sides of the same coin so the two will have to be done together otherwise the conflict of interest becomes more persistent," he added.
On when these two bodies will be set up, the Finance Secretary said, "exact timing will be determined but it has to go hand in hand. It has to be 2-3 months here and there."