Union finance Ministry constituted Shah Committee to look into the issue of MAT on FIIs

Union finance Ministry on 20 May 2015 constituted Shah Committee to look into the issue of Minimum Alternate Tax (MAT) on Foreign Institutional Investors (FIIs).

The committee will be headed by Justice A P Shah while the other members are Dr. Girish Ahuja, a chartered accountant and former Associate Professor of Commerce, Shri Ram College of Commerce, University of Delhi and Dr. Ashok Lahiri, former Chief Economic Adviser and Executive Director, ADB and currently Chairman of High Level Committee to interact with Trade and Industry on tax laws.

Further, the committee would examine the matter relating to levy of MAT on FIIs for the period prior to 1 April 2015.

It will also examine all the related legal provisions, judicial/quasi judicial pronouncements and such other relevant aspects as it may consider appropriate. The committee has been requested to give its recommendations on the above issue expeditiously.

The committee shall set its own procedure for regulating its work. The term of the committee will be for one year or such period as may be notified by the Government from time to time.

The committee may interact with various stakeholders as it may deem fit. The committee may also invite officers from Department of Revenue including the Central Board of Direct Taxes (CBDT) for consultations/discussions as may be necessary.

Union Finance Ministry had announced the decision to set up the committee on 7 May 2015. The committee was appointed to resolve the contentious issue of MAT between the tax authorities and the foreign investors.

As per the Finance Act, 2015 the 20 percent MAT on Capital Gains made by FIIs is waived off from the financial year 2015-16. However, the issue of imposing MAT for past years (till 2014-15) has become controversial as the FIIs raised objections to 68 notices (in lieu of 602 crores rupees) issued by the International Taxation Wing of the Income Tax Department in lieu of MAT.

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