Tax authorities advised to go slow on FIIs over MAT

 The Dollar Business Bureau As foreign investors eagerly wait for the contents of the ‘Committee’ headed by Justice A. P. Shah that is looking into the issue of mimimum alternate tax (MAT) on foreign institutional investors (FIIs), officers of the Central Board of Direct Taxes (CBDT) dealing with international taxes have been advised not to take any co-ercive action against FIIs for recovery of demand already raised by invoking provisions of MAT. Issue of fresh notices for reopening of cases as also completion of assessment should also be put on hold unless the case is getting barred by limitation, said the government, reported a PIB release. Recently, CBDT has issued a notification saying “It has come to the notice of the Board that several FIIs receiving income from transactions in securities claim such income as exempted from tax by availing benefits provided in the Double Taxation Avoidance Agreements (DTAAs) signed between India and their respective countries of residence.” “Since the issue involved in such cases is limited, such claims should be decided expeditiously and the decision may be taken on such claims within one month from the date such claim is filed,” it added. This move by the Indian government could create a positive environment in the case of FIIs falling under the DTAA. However, the move may not seem positive for the FIIs belonging to the countries that do not come under DTAA. The CBDT circular came two days after the government reached out to 1,000 FIIs across US, Singapore, Hong Kong and Mauritius, giving them assurance on claims that can be made over the treaty benefits, says reports. The government had sent notices to FIIs for alleged non-payment of MAT on the capital gains made by them up to March 31, 2015.    

May 12, 2015 | 7:57 pm IST.