MAT exemption to foreign companies

Global Tax Update:May/India

Mr. Narendra Modi led Government of India presented its first full-fledged reform proposals in the form of Budget 2015 on 28 February 2015. Income tax reform proposals were presented in the form of Finance Bill, 2015. During discussions on the Finance Bill, 2015 the Government proposed certain amendments to the Finance Bill, 2015 which provide further relief to foreign companies. In this issue we discuss those changes. (Global Tax Update:May 2015/India)

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1. MAT exemption to foreign companies

Minimum Alternate Tax (MAT) is a tax levied at the rate of 18.5% (plus applicable surcharge and cess) if the tax at normal corporate tax rate on the taxable income of a company is less than 18.5% of the book profits. MAT is levied both on domestic and foreign companies.

2. Residential status of companies

As per provisions originally contained in the tax laws, a company will become resident in India if the control and management of its affairs is wholly situated in India. The Finance Bill, 2015 as originally presented on 28th February proposed to change this to the effect that a company will become resident of India if its place of effective management is in India at any time in the year.

>> Click for Japanese [インド外国法人に対する最低代替税の免除 ほか]

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