A ruling by the Mumbai Income Tax Appellate Tribunal this week has held that the provisions of the Minimum Alternate Tax, or MAT, do not apply to foreign companies, including foreign portfolio investors (FPIs). Tax experts reckon this is a welcome judgment for FPIs which are foreign banks or reinsurance companies also having an Indian branch. It affirms the view that income of overseas branches of foreign banks, registered as FPIs, will not be automatically subject to MAT provisions, and that treaty provisions override the provisions of the IT Act, which include MAT provisions. “Foreign companies in general will fund this ruling to be a reaffirmation of the principle that MAT does not apply to them. In any case, the decision that MAT does not apply to income that does not get recorded in the books of account will be useful to all taxpayers,” Anish Thacker, partner at EY India, said.The case is for AY2015-16 and pertains to the Singapore branch of Credit Suisse, a Swiss bank, which is registered with Sebi as an FPI.
