In a bid to reassure foreign investors on tax policies, top government functionaries on Wednesday held meetings with FIIs, but refused to relent on Rs 40,000 crore past tax demand saying the remedy lies in judicial appeal.
The revenue department had sent notices to FIIs demanding 20 per cent MAT on their capital gains till March 31, 2015.
First, Minister of State for Finance Jayant Sinha met Foreign Institutional Investors (FIIs) which was followed by another meeting. Revenue Secretary Shaktikanta Das also participated in the meetings.
"Our government is a responsive government. If people have any problem or complaints, they can come and discuss with us. I have met investors in the last few days and met them this morning as well," Sinha said.
A large number of FIIs have protested the notices and demands saying they were exempt from long-term capital gains tax.
Some FIIs had approached the Authority for Advanced Rulings (AAR), which had ruled in favour of tax department. Sinha said there was ambiguity over applicability of MAT during the previous UPA government.
The problem arose because AAR ruled that MAT is to be applicable. This no longer is a policy issue, but it now is a judicial issue, which has gone to court. So the solution to the past cases of 2-3-4 years... whether tax is applicable or not, is now a judicial proceeding If you want relief, the remedy lies in appeal. There cannot be policy action. You will have to appeal in the Supreme Court and when Supreme Court ruling comes, it will be clear," he told CNBC TV18 channel.
He further said government is making an effort to make investors understand why issue of MAT (on capital gains made by them) has arisen and how it can be resolved.
Government already made it clear that for the future MAT will not be applicable.
A provision to this effect has been included in Finance Bill and once it is approved by the Parliament, the tax will not be applicable from April 2015.
When asked if the government will help in the appeal process, Sinha said the government will see what case is presented and what arguments are there.
"If there is any help that can be given, we will see," he said.
Sinha also said that informed and sophisticated investors understand that if a judicial branch in a democracy takes a decision, executive cannot interfere in it.
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