Minimum Alternative Tax (MAT) waiver on foreign institutional investors (FIIs) prior to April, as recommended by the government-appointed Shah panel, would be positive for the stock market, union Minister of State for Finance Jayant Sinha said on Saturday.
“The Shah report has said the MAT issue should be resolved quickly, which I think will be positive for the market,” Sinha told reporters on margins of a science event in Bengaluru.
The three-member panel, headed by Law Commission chairman AP Shah, set up on May 20, has advised the government not to levy 20 per cent MAT on foreign investors before April 1, 2015, as no legal provision exists for such imposition.
Though the budget for 2015-16 removed MAT on foreign investors (FIIs), the government said the demand raised for the earlier period would stay, leading to FIIs exit the stock markets in droves.
The tax department also served notices on about 70 FIIs, asking them to cough up about Rs 600 crore as MAT dues of previous years.
Though Sinha did not confirm if the government had accepted Shah’s advice, investors expect a favourable response to spur the stock markets.
On growth prospects, Sinha said he was optimistic that it would continue despite global volatility, as there were many other positives in the Indian economy.
“Market volatility is due to slowdown in China and fears of the US Federal Reserve raising interest rates in turbulent times. But many positives in the global and Indian markets will enable growth in India,” he said after inaugurating a science fest at the Indian Institute of Science (IISc) in Bengaluru.