US-India Business Council hails ruling on MAT for FIIs

The US-India Business Council (USIBC) has welcomed the government's acceptance of a panel's recommendation that the Minimum Alternative Tax (MAT) provisions do not apply retrospectively to Foreign Institutional Investors (FIIs) before April 1 this year.

In a big relief for foreign investors, the government on Tuesday accepted recommendations of a high-level panel headed by Law Commission of India Chairman AP Shah that MAT should not be imposed on overseas portfolio investors retrospectively. Finance Minister Arun Jaitley said the panel submitted its final report on the issue on August 25.

"The Council applauds Finance Minister (Arun) Jaitley and Justice AP Shah and their teams for reaching this resolution," the trade body, composed of more than 300 top-tier US and Indian companies advancing US-India commercial ties, said in a statement on Wednesday. "This announcement demonstrates the Government of India's commitment to attracting long-term foreign investment into the country by providing greater tax certainty and ensuring ease of doing business for the global investment community," said USIBC President Mukesh Aghi.

This decision reduces tax uncertainty for FIIs and will result in increased investment into India, it said.

The council said it supports actions, including those announced in India's Union Budget, supporting a more predictable and consistent tax framework that follows published guidance, respects past court decisions, and conducts audits and investigations without predetermined outcomes and targets for revenue.