Foreign portfolio investors and companies are now exempt from MAT

Q: Government provides tax relief to foreign PE investors from MAT net.

Govinda,

29th September 2015

Real estate News in Mumbai

minimum alternate tax

foreign investors

private equity firm

retro tax

foreign portfolio investors

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Replies (6)

According to me, the decision to amend the Income Tax Act on non-applicability of MAT was a welcome step as it would remove uncertainty and encourage foreign investments into the country.

khushisha, Mumbai

2nd October 2015

Comment

Right!!!! The matter came into existence when investors had raised a hue and cry and approached courts when the tax department recently issued notices to FPIs in about 68 cases with a total tax demand of Rs 602.8 crore for the period before April 1, 2015.

Siddharth Rana, Pune

1st October 2015

Comment

The relief accepted to FPIs and foreign companies are for the period before April 1, 2015. For the later period, they are however not liable to pay MAT as per an amendment introduced in the law through this year's Budget.

Tarun Shah, Ahmedabad

30th September 2015

Comment

Really a good move.....
With this amendment, one can look forward to speedy solutions to other pending tax disputes as the government's intention was evident that it wants to end the tax uncertainty.

Deep Thakur, Delhi-NCR

30th September 2015

Comment

Hi Nishant,
But many foreign companies operate in India without PEs, there are others that have India incorporated totally owned subsidiaries or joint ventures and/or PEs here but still prefer do some of their businesses in the country without a PE for the same.

Ramesh Reddy, Bangalore

29th September 2015

Comment

As per the latest clarification puts the MAT dispute to rest finally as all sorts of foreign investors without business presence in India, foreign portfolio investors and companies are now exempt from MAT, regardless of a tax agreement.

Praveen Modi, Mumbai

29th September 2015

Some of the bilateral tax agreements such as the India-UK one, have a clause that makes it almost impossible to use the route without PE for doing businesses similar to those done via a PE.

Ramesh Reddy, Bangalore

29th September 2015

As per the finance ministry, those having a permanent establishment or place of business in India are anyway required to prepare their books of accounts and present it to shareholders at an annual general meeting under the Companies Act and thus they could attract MAT provisions if their tax liability calculated as per normal income tax provisions falls below 18.5% of their book profits computed as per Companies Act on account of excessive use of tax exemptions.

Praveen Modi, Mumbai

29th September 2015

The amendments to the tax law to this effect would be brought in very soon. As the govt. has decided to give relief to foreign companies with no "place of doing business" in India from the 18.5% minimum alternate tax demands issued to them.

Praveen Modi, Mumbai

29th September 2015

Comment

Right Praveen....
The relief will be available to companies regardless of whether they are from a country with a tax agreement with India or not.

The move could benefit companies such as the US based Timken facing MAT demands and the Mauritius based Castleton Investments, which is fighting a tax notice in the Supreme Court.

Nishant Bhat, Mumbai

29th September 2015