The finance ministry on Friday said the income tax department wouldn’t adopt coercive methods for recovery of minimum alternate tax (MAT) dues from foreign investors. “Field officers will not push for any coercive demand on MAT claims right now,” said a ministry official.
The move comes a day after the ministry announced it would set up a panel to look into the issue. While the ministry is drafting the terms of reference of the panel, to be announced in four days, sources said the panel’s report would give a “policy direction to tax officers on applicability of MAT on FIIs (foreign institutional investors)”.
On Friday, Revenue Secretary Shaktikanta Das met Law Commission Chairman A P Shah, who is to head the panel on recovery of MAT dues from FIIs. The committee would primarily comprise tax experts, sources said, adding the ministry was working on a time limit for the committee to submit a report.
The report wouldn’t be binding on the government, they said, adding as cases pertaining to the matter were pending in courts, the report would give a direction to the government to resolving these disputes. The tax department has issued notices to 68 FIIs, totalling Rs 602 crore, for non-payment of MAT at 20 per cent of the profits earned.
Besides MAT, the committee will also look into the direct tax policies and legacy issues that lead to uncertainty in tax administration.