New Delhi: The government announced a committee on Wednesday headed by a former high court chief justice to suggest ways to resolve a dispute with foreign investors over previously untaxed gains that has rattled businesses.
The Income Tax Department has been demanding that foreign firms pay a Minimum Alternate Tax (MAT) on profits. They did not pay it earlier because it was widely believed that it only applied to domestic investors until a court ruled otherwise in 2012.
The government has said while the tax will not apply from April 1, 2015 onwards, past incomes will face the levy, a stand challenged by foreign investors.
On Wednesday, the Finance Ministry announced that a panel headed by retired chief justice A P Shah would review the imposition of the minimum tax on transactions before April 1, 2015.
"The Committee will also examine all the related legal provisions, judicial/quasi judicial pronouncements and such other relevant aspects as it may consider appropriate," the Finance Ministry said in a statement.
Other members of the panel are Ashok Lahiri, a former chief economic adviser to the federal government, and Girish Ahuja, a chartered accountant.
The tax department has imposed retrospective MAT tax claims totalling Rs 602 crore ($93.8 million) on companies. Some firms have challenged the levy as well as the 2012 court ruling.
The Income Tax Department has been demanding that foreign firms pay a Minimum Alternate Tax (MAT) on profits. They did not pay it earlier because it was widely believed that it only applied to domestic investors until a court ruled otherwise in 2012.
The government has said while the tax will not apply from April 1, 2015 onwards, past incomes will face the levy, a stand challenged by foreign investors.
On Wednesday, the Finance Ministry announced that a panel headed by retired chief justice A P Shah would review the imposition of the minimum tax on transactions before April 1, 2015.
"The Committee will also examine all the related legal provisions, judicial/quasi judicial pronouncements and such other relevant aspects as it may consider appropriate," the Finance Ministry said in a statement.
Other members of the panel are Ashok Lahiri, a former chief economic adviser to the federal government, and Girish Ahuja, a chartered accountant.
The tax department has imposed retrospective MAT tax claims totalling Rs 602 crore ($93.8 million) on companies. Some firms have challenged the levy as well as the 2012 court ruling.
© Thomson Reuters 2015
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