Press Information Bureau

Government of India

Ministry of Finance

25-November-2016 17:22 IST

Foreign portfolio investors (FPIs) raised certain taxation issues relating to applicability of Minimum Alternate Tax (MAT) on them. The Government set up a committee under Justice A. P. Shah to examine the issue raised by them. On the recommendations of the committee, an amendment in section 115JB of the Income-tax Act, 1961 has been carried out vide Finance Act, 2016 to the effect that MAT will not be applicable to foreign companies with effect from 01.04.2001, if

(i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in sub-section (1) of section 90 of the Income-tax Act, 1961 (‘the Act’) or the Central Government has adopted any agreement under sub-section (1) of section 90A of the Act and the assessee does not have a permanent establishment in India in accordance with the provisions of such agreement; or

(ii) the assessee is a resident of a country with which India does not have an agreement of the nature referred to in clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies.

This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

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DSM/KA

Minimum Alternate Tax exemption for certain foreign companies where no permanent establishment or no domestic company registration applies. Finance Act, 2016 amended section 115JB to exclude certain foreign companies from Minimum Alternate Tax (MAT) from 01.04.2001 where either the company is resident of a treaty country and lacks a permanent establishment in India under that treaty, or the company is resident of a non treaty country and is not required to register under domestic company law.