New Delhi, May 25 (IANS) The Justice A.P. Shah-led three-member committee on direct tax matters held its first meeting on Monday on the applicability of the controversial minimum alternate tax (MAT) on Foreign Institutional Investors (FIIs) for previous years.
An official source told IANS on late Monday evening that the three-member panel met to discuss on its terms of reference and the methodology it is going to adopt for considering the contentious tax issue.
The panel, headed by Law Commission chairman Shah, was formally set up last week with former chief economic advisor Ashok Lahiri and noted chartered accountant Girish Ahuja as the other members.
The finance ministry in a statement on Wednesday said other tax issues would be referred to the Shah committee in due course.
The Income Tax department had sent notices to 68 FIIs demanding Rs 602.83 crore as MAT dues of previous years, with FIIs, in turn, moving the higher court challenging the demand.
The Shah committee will examine MAT notices for the period before April 1, 2015, and has been requested to “give its recommendations expeditiously”.
Finance Minister Arun Jaitley in the Budget 2015-16 had exempted FIIs from paying MAT with effect from April.
The Central Board of Direct Taxes (CBDT) earlier this month said it will not issue any new demands for payments, and will take no coercive action to pursue claims that have already been filed under the controversial MAT.
Even after Jaitley’s announcement exempting FIIs from paying MAT on capital gains earned by them, the income tax department sent notice to at least 90 foreign portfolio investors.
With the uncertainty created by MAT, foreign investors sold around $630 million in Indian shares and bonds on May 6, marking the biggest single-day sales since January 2014.