JPMorgan, HSBC and Morgan Stanley were among the foreign portfolio investors (FPIs) who were present at the meet, which lasted for more than an hour.
Although the finance minister, in his Budget speech, had announced that MAT would not be applicable to FPIs, there was an ambiguity over the show-cause notices already issued by the tax department.
Also, the wording in the finance Bill was such that it suggested FPI investments in the debt market would still be under the ambit of MAT.
After the meeting, the minister refused to comment on the issues raised by FIIs. “If there are ambiguities, I would clear those in Parliament rather than talk about it outside,” he said to journalist.
“To rationalise the MAT provisions for FIIs, profits corresponding to their income from capital gains on transactions in securities that are liable to tax at a lower rate shall not be subject to MAT,” said Jaitley in his Budget speech.
These words, however, leave the status of debt investors uncertain. On allowing offshore fund managers set up their offices in the country for managing local investments, the FM had said, "I propose to modify the permanent establishment (PE) norms to the effect that mere presence of a fund manager in India would not constitute PE of the offshore funds resulting in adverse tax consequences."
Sources said FPIs told the FM the conditions on PEs are stringent and might deter from foreign fund managers relocate to India.