In its decision, Finance Ministry stated that it will pursue legislation, clarifying that Minimum Alternate Tax (MAT) does not apply to investment funds and will instruct revenue assessors that the government agrees that MAT does not apply.
Welcoming the Indian government's decision to adopt recommendations of the AP Shah Committee Report on Minimum Alternate Tax, US-based Investment Company Institute has said the move will bring certainty and relief to the investors.
In its decision, Finance Ministry stated that it will pursue legislation, clarifying that Minimum Alternate Tax (MAT) does not apply to investment funds and will instruct revenue assessors that the government agrees that MAT does not apply.
"The announcement by the Ministry of Finance brings certainty and relief to regulated funds from around the world and their investors, enhancing the benefits of participating in India's financial markets," said Paul Schott Stevens, President and CEO of Investment Company Institute on Wednesday.
"We have advocated vigorously on behalf of our global membership on this issue, and are pleased that it is being resolved to allow global funds to remain fully engaged investors in the country's growing capital markets," he added.
ICI deputy general counsel Keith Lawson said the actions effectively remove the tax uncertainty faced by foreign funds that have a strong interest in continued growth of the Indian capital markets.
"Foreign institutional investors needed clarity that MAT does not apply to them in any fashion, retroactively or in the future," Lawson said.
"The Shah Committee's report and the Ministry's subsequent acceptance of the report offer this clarity," he added.
The ICI is the national association of US investment companies. Established in 1940, ICI encourages adherence to high ethical standards, promotes public understanding of funds and investing.
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