This must have soothed nerves after the special investigation team (SIT) on black money suggested a tightening on this mode of investment coming into the country from overseas earlier, which prompted speculations about the government ultimately looking at the phasing out of P -Notes.
Revenue secretary Shaktikanta Das clarified at an industry interaction on Thursday that, “It is nobody’s intention to ban P-Notes overnight”, adding that the government will examine how to improve the KYC norms.
Going by the signals coming out of the ministry, another much-awaited respite for the FIIs is also expected soon — the government is favourably considering the A P Shah panel’s recommendation that there is no case for imposing the minimum alternate tax (MAT) on FIIs retrospectively.
The tax has been abolished from April 1, 2015 but the government had to set up the Shah panel to look into the notices sent by the income tax department in the cases prior to this date after it escalated into a huge controversy — the department sent notices to 68 FIIs demanding Rs 602.83 crore for paying up MAT on the book profits made by them up to March 31, 2015.
Though the committee submitted its report on July 24, the government is yet to make it public and has also not taken any decision on its recommendation suggesting some issues in its implementation.
A final call quickly will not only clear the air in this case, but will also pave the way for handing over other legacy tax issues — retrospective tax amendments in general and Vodafone and Cairn tax cases in particular besides the transfer pricing mess — to the Shah committee.
The NDA government has to take a clear view on the retrospective amendments, and next budget is a good opportunity for this, to meet its promise of ending the tax terror.