SME Times News Bureau | 01 May, 2015
The government on Thursday announced tax relief to foreign
investors, exempting income from securities transactions, royalties and
technical service from the contentious minimum alternative tax (MAT).
The tax, which continues to be effective retrospectively on foreign
institutional investors (FIIs), who are fighting it in court, will not apply to
on sale of units of real estate investment trusts (REITs), Jaitley said
replying to the debate in the Lok Sabha on the Finance Bill 2015, which
contains the government's tax proposals for the current fiscal.
MAT will also not be applicable on earnings from royalties and technology fees,
he added.
The finance minister, however, said the exemptions would apply only in those
cases where the normal tax rate is below 18.5 percent.
Recently, five FPIs filled a writ petition in the Bombay
High Court against the tax department’s minimum alternate tax (MAT) demand.
Commenting on the development, Jasmeet Chhabra, managing partner, Religare
Global Asset Management, said: "Sale of units of REIT in any case are to
be treated akin to sale of listed security, which should not attract tax. By
leaving the ambiguity pertaining to REITs, it was only killing the incentive
for asset owners to access capital through REIT."
"Hence the clarification issued, though welcome, is not of much relief or
motivation. The contentious issue of MAT at the time of transfer of shares in
lieu of REIT units continues, which will make such transactions
expensive," Chhabra said in a statement.
Jaitley also cut the export duty on some grades of iron ore from 30 percent to
10 percent, and raised the basic customs duty on natural rubber.