The investment Association comments on lifting
The Investment Association comments on the announcement yesterday by the Government of India confirming that it accepts the recommendation of the Shah Committee on the application of Minimum Alternative Tax (MAT) to foreign investors.
In recent months Indian tax inspectors had begun to assess foreign funds to MAT for periods going back up to six years. The understanding of MAT had been that it was a tax levied in certain circumstances and only in respect of domestic (Indian) companies. The potential retrospective application of the tax was causing uncertainty about the stability of the investment environment in India, and this clarification is welcome good news for investors and the Indian economy.
Jorge Morley-Smith, Director, Head of Tax said:
"International investors in India will be relieved by the Indian government's decision to introduce new legislation to confirm that foreign investors are not liable to the domestic MAT. Recent moves to levy this tax retrospectively caused great concern to investment managers, who rely on a simple, fair and stable tax regime to invest money on behalf of their clients. UK authorised funds invest nearly £7 billion supporting jobs and growth in the Indian economy. We met with Indian government representatives and urged them to take this action to provide a secure and reliable investment environment in India so we are delighted by this response."
