The AP Shah panel that was to take a call on the levying of minimum alternate tax (MAT) on foreign institutional investors (FIIs) has ruled in their favour. The panel has recommended giving relief to FIIs on MAT levy prior to April 1,2015.
Sources say the government will be favourably considering these recommendations. Justice Shah met the Finance Minister on Thursday to decide on the same issue.
The Shah panel had submitted its 66-page report to the Government on July 24 and its analysis is crucial for the government to firm up its stance on the Castleton case.
Meanwhile, the Castleton case has been postponed to September 29 as the governmet sought more time from the apex court to firm up its stance after analysing the findings of the AP Shah report.
Below is the transcript of Pratibha Jain of Nishith Desai Associates' interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Sonia: There could be some relief for the foreign investor. He may not have to pay minimum alternate tax (MAT) on the prior period, prior to the April 1. How would you react to that?
Jain: If that is the news, it is very good news. If this is what the foreign institutional investor (FIIs) are expecting and everybody, even the intermediaries are hoping because we need some strong messages to go to the foreign investors that there is certainty in terms of how we deal with their issues in the country. Application of MAT even though we claim it is not retrospective it was seeming to all FIIs as a retrospective application of tax to them. So, definitely a very positive message for the investors and should be very good for the market.
Anuj: Do you think this would assuage a lot of investors and should be the end of the story or do we see some more developments in this issue?
Jain: The AP Shah Committee recommendation is only a recommendation. The government will have to follow it through. The fact that the recommendation will be positive and the government had setup the committee and even in the Supreme Court the two pending cases are waiting for the committee recommendations our expectation and these steps would have to be followed. Firstly in the pending cases we are hopeful that they will not go ahead with any argument till the government comes up with a stand taking the recommendations and so that the matter can be solved by the government itself rather than having to do it through the court.
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