Five foreign funds have filed a writ petition in Bombay High Court challenging India’s demand for minimum alternative tax (MAT) on profits earned before April 1 from trading in stocks and bonds, according to an April 30 Economic Times report.
The firms are located in the US and UK and can not claim tax treaty exemptions to shield capital gains from MAT, the Economic Times reports.
According to Finance Minister Arun Jaitley, India has no choice but to impose MAT on pre-April 1 capital gains of foreign institutional investors because India’s Income Tax Authority for Advance Rulings has held that foreign firms are liable for the tax.
Jaitley said foreign firms that invested through countries with which India has a tax treaty can claim a tax exemption from MAT, but any further relief from MAT for pre-April 1 gains should be sought in the courts.
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