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The high-level Justice A P Shah Committee today submitted a 66-page report to the government on applicability of minimum alternate tax (MAT) on FIIs, an issue which had riled foreign investors.
Shah submitted the report, whose contents have been kept secret for now, to Finance Minister Arun Jaitley at a time when foreign investors have dragged the government to court over applicability of MAT on capital gains made by them. Foreign institutional investors (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, CBDT and leading advocates," Shah said after submitting the report to Jaitley.
"The term of reference was MAT on FIIs. We answered that," he added without elaborating.
Revenue Secretary Shaktikanta Das later speaking to reporters said: "The government will examine and consider the report. The government will take a decision soon."
Das said the government will not make the report public before it examines and accepts it.
The government had in May appointed the Shah Committee to examine the matter relating to levy of MAT on FIIs prior to April 2015. The committee looked into all related legal provisions, judicial, quasi-judicial pronouncements and other relevant aspects.
The panel, headed by Law Commission Chairman A P Shah, included former Chief Economic Advisor Ashok Lahiri and Chartered Accountant Girish Ahuja as other two members.
The Supreme Court is hearing a petition filed by Castleton on levy of MAT while there is also another case on the same pending in the Bombay High Court.
"The Committee being a government appointed one, we will give a lot of weightage to the report," Das said, adding that the panel has gone through certain legal issues.
Jaitley in Budget 2015-16 exempted FIIs from paying MAT with effect from April 1, 2015.
The Shah committee has been entrusted with the task of examining MAT notices to FIIs for the period prior to April 1, 2015.
The Income Tax Department had sent notices to 68 foreign institutional investors (FIIs) demanding Rs 602.83 crore as MAT dues of the previous years. This has raked up a big controversy, with FIIs moving the higher court challenging the MAT demand.
"We have examined the issues. There was some inconsistent judgment of AAR and ITAT. We examined the material, the working of FIIs, international practices. The report takes a holistic view on the matter," Shah said.
Earlier, 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 one.
Following the announcement of setting up of the panel, the tax department has directed its field officers to put on hold issuance of fresh notices and any further assessments on levy of this tax on such entities.
Das further said other legacy tax issues would be referred to the Shah committee in due course.
