India’s finance ministry is likely to accept a proposal from a special panel to waive retrospective imposition of a controversial minimum alternate tax (MAT) on foreign portfolio investors, domestic media reported, citing government sources.
Such a decision could put to rest a controversy sparked after tax authorities started claiming MAT payments from foreign funds late last year.
Although MAT has been applied to domestic companies to ensure a minimum tax payment, it had never been imposed on foreign institutional investors (FIIs).
The government subsequently said it would no longer impose MAT on foreign investors from April 2015 and set up a special panel in May to advise it how to proceed with retrospective claims already made by tax authorities, which have been challenged in courts.
“The committee has recommended giving relief to FIIs on MAT prior to the period of Apr. 1, 2015, and the government is favourably considering it,” independent news provider NewsRise Financial quoted a government official as telling reporters on Friday in New Delhi.