New Delhi, June 16 (IANS) On the vexed issue of minimum alternate tax (MAT), the Central Board of Direct Taxes (CBDT) said on Tuesday that its officers will avoid coercive methods to recover dues on capital gains made by foreign investors.
The board will wait for a Supreme Court verdict on the issue, it said.
“If order (on levying of MAT on FIIs) is in appeal, then we can certainly tell our assessing officer (that) please don’t take it further; don’t agitate it further and this is exactly what we did in Shell and Vodafone tax cases,” CBDT chairperson Anita Kapur told reporters here.
“Shell and Vodafone cases went against us and once we accepted that judgment, we told our officers please don’t do future assessments and please don’t further agitate these in appeals,” she said.
She also said that she was not in a position now to talk about the Justice A.P. Shah-led committee going into the applicability of MAT on foreign institutional investors (FIIs) for previous years.
“I cannot anticipate what the Shah panel will do. The Commission has fixed a schedule for hearing out all the stakeholders. Let’s see how things proceed,” Kapur said.
“The merits of the issue can also be decided by the Supreme Court,” she added.
CBDT had, last month, said it will not raise any new demands for payments, and will take no coercive action to pursue claims that have already been filed under MAT.
The Income Tax department had sent notices to 68 FIIs demanding Rs.602.83 crore as MAT dues of previous years, and these FIIs, in turn, moved court challenging the demand.
The Shah committee will examine MAT notices for the period before April 1, 2015, and has been requested to give its recommendations expeditiously.
In the 2015-16 Budget, Finance Minister Arun Jaitley had exempted FIIs from paying MAT with effect from April.
Even after Jaitley’s announcement on exempting FIIs from paying MAT on capital gains earned by them, the Income Tax department sent notice to at least 90 foreign portfolio investors.
With the uncertainty created by MAT, foreign investors sold Indian shares and bonds of around $630 million on May 6, marking the biggest single-day sale since January 2014.