Feb 11, 2013 05:05 PM IST | Source: CNBC-TV18

Budget 2013-14: FinMin considering taxation of controlled financial corps

We learn from sources that the finance ministry is considering the taxation of controlled financial corporations. CNBC-TV18‘s Aakansha Sethi reports.

The finance ministry is considering taxation of controlled financial corporations, reports CNBC-TV18's Aakansha Sethi quoting sources.

This was part of the first draft of the direct taxes code (DTC). The idea is that those companies that are offshore entities, foreign companies that are controlled by Indian resident tax payers, will be taxed and will be brought under the tax net. It remains to be seen if this proposal has actually gone forth.

FinMin move may sound death knell for oil refineries

Another proposal from the DTC that is being taken up is minimum alternate tax (MAT) on gross assets. It was dropped in the second draft of the DTC after strong opposition from industry. However the finance ministry is thinking of ways to extend both the alternative minimum tax (AMT) and the MAT. One of them is MAT on gross assets, at a rate of say one percent. The other is to increase the MAT rate to 20 percent from the current rate which is again the rate at which it was there in the DTC.

There are other quarters in the finance ministry that are saying that it is important for this Budget to be investor friendly and not introduce anything that will deter financial and equity markets in any way. So, it remains to be seen what decision is finally taken. At this point both these proposals are being discussed in the Budget meetings. 

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