Finance minister refuses to waive MAT despite selling in equities
The Sensex lost 210 points. It has lost over 1,370 points in five sessions after concerns of fii on retrospective taxation, muted earnings
New Delhi: The stock markets fell for the fifth straight session on Tuesday due to concerns over retrospective taxation on FIIs and muted corporate earnings. BSE Sensex and Nifty closed at their lowest level in nearly four weeks. Concerns over retrospective taxation on foreign portfolio investors had prompted them to sell stocks worth $239.93 million on Monday and it weighed on the overall market sentiments.
However, finance ministry maintained that they will not give up on Rs 40,000 crore tax demand on FIIs and FPIs. The benchmark BSE Sensex slipped by 210.17 points to 27,676.04 while NSE Nifty ended below 8,400-level. Sensex has now lost over 1,370 points in five sessions.Finance ministry officials said that the government will not relent to FIIs’ pressure for withdrawing tax demands worth Rs 40,000 crore towards minimum alternate tax.
“The total demand is around Rs 40,000 crore. We will not yield to the FII demand for tax waiver,” said a senior official. The official said that the decline in stock market was due to the impact of “the stimulus given to the Chinese economy and also because of Chinese monetary policy easing”. In order to boost its economy, Chinese central bank eased the monetary policy on Sunday by cutting interest rates by one per cent, the steepest reduction since 2008.
Finance minister Arun Jaitley had said in his Budget speech that capital gains made by foreign investors from April 1, 2015 would be exempted from MAT. But the exemption does not apply retroactively and the US and European investor groups are upset over the tax department’s attempts to levy the same. A large number of such investors have been asked to pay MAT for untaxed capital gains earned by them. However FIIs and FPIs have protested these tax notices, saying they were exempted from long-term capital gains tax and had never been subjected to MAT in previous years.
The revenue department had sent notices to Foreign Institutional Investors demanding 20 per cent MAT on capital gains earned by them till March 31, 2015. The FIIs had then approached the Authority for Advanced Rulings (AAR), which had ruled in favour of the tax department. Revenue secretary Shaktikanta Das had said that FIIs should look at courts to appeal against the tax rather than seek retrospective waiver. Finance ministry’s officials also said that rupee’s decline against the US dollar is a temporary phenomenon and the domestic currency will stabilise soon.
( Source : dc correspondent )
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