The government will not relent to Foreign Institutional Investors’ (FIIs) pressure for withdrawing tax demands worth Rs 40,000 crore (Rs 400 billion) towards minimum alternate tax (MAT), a top finance ministry official said on Tuesday.
"The total demand is around Rs 40,000 crore. We will not yield to the FII demand for tax waiver," he said.
A large number of such investors have been asked to pay MAT for untaxed capital gains earned by them, but they have protested these tax notices and demands saying they were exempt from long-term capital gains tax and had never been subjected to MAT in previous years.
The revenue department had sent notices to FIIs demanding 20 per cent MAT on capital gains earned by them till March 31, 2015.
The FIIs had then approached the Authority for Advanced Rulings (AAR), which had ruled in favour of the tax department.
Finance Minister Arun Jaitley had previously stated that India was not a tax haven and legitimate dues from foreign investors would be pursued.
Jaitley had said in his budget speech had said that FIIs would be exempted from paying MAT on capital gains made by them with effect from April 1, 2015.
Even Revenue Secretary Shaktikanta Das had said that FIIs should look at courts to appeal against the tax rather than seek retrospective waiver.
"If you are not satisfied with a particular judicial pronouncement, the answer is to go and appeal to a next higher judicial forum... The answer is not in between rushing to the government and expecting the government to intervene through executive action or initiating a legislative measure to provide retrospective exemption," Das had said.
Illustration: Uttam Ghosh/Rediff.com
