India’s Finance Minister Will Not Yield To Pressure From Foreign Investors
The Indian government led by Narendra Modi has been focusing on developing India and one of its key strategies is to encourage foreign enterprises to set up operations in India and invest into their economy.
On the 1st of April 2015, Arun Jaitley the finance minister of India stated during his budget speech that foreign investors would receive an exemption on their minimum alternative tax (MAT) on all their capital gains. Both European and American investors were happy with the new proposal and expected their outstanding taxes on capital gains to be waived.
However Jaitley confirmed that this amendment will not be applied on a retroactive basis but will only be valid from the 1st of April 2015. This means all foreign investors will have to pay their outstanding taxes and cannot use the new policy to avoid paying their taxes. A number of foreign enterprises have put pressure on the Indian government seeking a tax waiver but the finance minister has stated that there will be no changes.
In a statement, a representative of the Indian government who preferred to be anonymous said “Government will not yield to the demand of FIIs (foreign institutional investors) to withdraw tax notices issued to them”.
The Indian government is in the process of sending out a number of MAT calculations to foreign investors asking them to furnish their accounts for the fiscal 2011/2012. The Income Tax department also plans to go back a few years and check the records of their foreign enterprises to ensure that all MAT outstandings are cleared.