New Delhi — Following the acceptance of the recommendation of the Justice AP Shah Committee by the government, the Central Board of Direct Taxation (CBDT) has advised its field authorities to keep in abeyance for the time being, pending assessment proceedings in cases of FIIS/FPIS involving applicability of Minimum Alternate Tax (MAT) on FIIS/FPIS for the period before 1 April of this year.
The CBDT has further advised the officers not to pursue the recovery of outstanding demands, if any, in such cases.
A committee on direct tax matters chaired by Justice Shah had been constituted to examine the issue of applicability of MAT on FIIs/FPIs for the period prior to 1 April. The committee submitted its final report to the government on 25 August. It has recommended that Section 115JB of the Income Tax Act, 1961, may be amended to clarify the inapplicability of its provisions on businesses with no permanent establishment.
The government accepted the recommendation and decided to carry out an appropriate amendment in the Act so as to prescribe that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/permanent establishment in India, for the period prior to 1 April.
The field authorities have accordingly been advised to take into consideration the above position and keep in abeyance for the time being. An instruction to this effect has been issued by the CBDT here yesterday.