<div>The Finance Ministry on Tuesday (01 September) accepted AP Shah Panel's report on Minimum Alternate Tax (MAT). </div><div> </div><div>Finance Minister Arun Jaitley has said that MAT will not be levied on FIIs prior to April 01, 2015. He also added that the report which is 68 pages long is the final draft of the panel and that he wants to move the amendment to IT Act in the winter session of Parliament. The ministry will issue instructions to field formations till the IT Act is amended. </div><div> </div><div>This comes as a huge relief to foreign portfolio investors (FPIs), who in effect will not be subject to MAT in India. </div><div> </div><div>The controversy surrounding MAT hit the government earlier this year, as the revenue department sent out demand notices to FPIs for paying MAT, based on the AAR verdict of 2012. </div><div> </div><div>Foreign investors have always contended that MAT is not applicable on them and have also moved the Court challenging the tax demands. Though, finance minister Arun Jaitley in his Budget for FY16 exempted FPIs from paying MAT from 1st April 2015, but the issue of coughing up this tax till March 2015 remained unresolved.<br><br>With this tax controversy threatening the Modi Government's promise of a non-adversarial tax regime in India, Arun Jaitley had announced the formation of the 3-member AP Shah Panel to be headed by Justice AP Shah in May this year. The Shah Panel submitted its report to the Finance Ministry on 24th July. </div><div> </div><div>While most tax experts have always held that foreign investors who do not have permanent residency in India should not pay MAT, but the revenue department has maintained that they had to serve the demand notices as their hands were tied by the AAR verdict of 2012.</div><div> </div><div>MAT was introduced by P Chidambaram as finance minister in 2007, as a levy on book profits from stopping domestic companies from evading tax. But MAT had never been applied on FIIs or FPIs before 2014. So far 68 notices have been served by the tax authorities and Rs 680 crore has been demanded under MAT from FPIs.</div>
