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The tussle between foreign portfolio investors (FPIs) and the income-tax department has now reached the Bombay High court, with five FPIs filing a writ petition against the department’s minimum alternate tax (MAT) demand.
Among the FPIs that have taken the government to court over the MAT issue are National Westminster Bank Plc and BNP Paribas L1. National Westminster Bank Plc has filed three pleas as a depository of funds.
Other funds include First State Asia Pacific Sustainability Fund, First State Indian Subcontinent Fund, and First State Global Emerging Market Sustainability.
The funds are being represented by the law firm Khaitan & Co.The law firm and the funds could not be immediately approached for response.
Interestingly all funds that have filed the writ are based out of the US, UK and Luxembourg jurisdictions; India’s treaties with these nations do not exempt them from capital gains.
The income-tax department has already clarified that funds belonging to nations with tax treaties will be considered and exempted from MAT demand.
The matter will now be heard on May 6.
The income-tax department has so far sent 68 notices to Foreign Institutional Investors totalling a tax demand of Rs 602 crore. The demand could increase to up to Rs 3,000 crore as more cases are being assessed of previous years.
