Govt may favour relief on MAT to foreign investors

The government may support the waiver of the retrospective imposition of the controversial minimum alternate tax (MAT) on foreign portfolio investors at a hearing of the Supreme Court next month, a senior finance ministry official said.

On September 29, the Supreme Court is due to hear a legal challenge filed by Mauritius-based Castleton Investment against the government over a number of tax-related issues, including on whether MAT can be imposed on foreign investors.

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The government has already said it would no longer impose MAT from April, so its support for waiving any retrospective claims for the tax is seen as increasing the chances the Supreme Court will side with Castleton and rule that the tax cannot be imposed on foreign investors.

The official, who declined to be named, said a specially appointed panel had recommended not imposing MAT on foreign investors, a position the government was considering adopting.

"The panel has recommended relief for FIIs (foreign institutional investors)," the official said. "The government is favourably considering the recommendations."

The government had sought time from the court earlier this month to study the recommendations before firming up its position on retrospective MAT claims.

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(Reuters)