A P Shah Committee (MAT)

A P Shah Committee


  • Mandate to examine the matter relating to levy of MAT on FIIs/FPIs for the period prior to 1.04.2015.
  • The Committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs.
  • The Government has accepted the recommendation of the Committee to clarify the inapplicability of MAT to FIIs/FPIs and has decided that an appropriate amendment to the Income-tax Act will be carried out.  Through the amendment the Government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/ permanent establishment in India, for the period prior to 01.04.2015.


MAT is a minimum tax levied on profit-making entities that don’t pay corporate income tax because of exemptions and incentives. 


The tax row had started after the income tax department started issuing notices to foreign investors for levy of MAT on capital gains accruing to them from sale of shares, citing an August 2012 order by the Authority for Advance Rulings in the case of Castleton Investment Ltd that MAT is applicable on both domestic and foreign companies.


The decision will help in reviving the investor confidence and ensuring clarity of taxation in the hands of the foreign investors



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