Clarificatory amendments to MAT rules are under consideration : Jayant Sinha

MoS during meeting with FII expressed that affected entities should approach courts to get relief on these matters.

In a move to bring some sanity in MAT controversy, BJP led NDA Government is considering clarificatory amendments to the rules relating to Minimum Alternate Tax (MAT) for the benefit of foreign investors who have been battling tax demands worth Rs 40,000 crore.

Minister of State for Finance, Jayant Sinha, said “Clarificatory amendments to MAT rules are under consideration of the government”. He made this comments while attending a conference on climate change held in Delhi on Thursday.

Mr. Sinha, along with top government officials, had held meeting with Foreign Institutional Investors (FIIs) on Wednesday, pressing for government’s Rs 40,000 crore tax demand, saying they should approach courts to get relief on these matters.

In case of investors from jurisdictions having Double Taxation Avoidance Agreements (DTAAs) with India, the treaty benefits would override the tax demands. Hence, such demands would not apply to the entities from DTAA countries such as Singapore and Mauritius.

The issue of MAT came in the spotlight, after Revenue Department sent notices to FIIs, demanding 20% MAT on capital gains made by them till March 31, 2015.

For all other foreign investors except those falling under DTAA, the only remedy left is to challenge the levy of 20% MAT on capital gains they made in past three years.

Earlier speaking on ‘Climate Change Finance In India’, Sinha said the private sector has to be a prime mover to help innovate and finance clean energy to mitigate environmental challenges.

Stressing the importance of private sector to take a lead he said, “India really needs to look towards the private sector for large-scale solutions in this area. Even as we talk about what government is doing with respect to climate financing… The reality is that the private sector is going to be the prime mover and prime agent in actually helping us to deal with the financing of the climate amelioration technologies”.

“We have to think, in India how we can come up with innovative solutions, where domestic venture capital, domestic private equity, some kind of innovative financing arrangement with public sector support (can) make it possible for us to enable a very valuable solution to take off,” Minister added.

Despite government clarification and efforts to alley the fears, MAT issue highlighted the opaque and Non predictable nature of Indian Taxation system.