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Minimum Alternate Tax (MAT) not applicable to foreign companies not having a permanent establishment / place of business in India

Global Tax Update:October 2015/India

Continuing the trend of simplifying the Indian tax law and without wasting much time after clarifying that MAT provisions are not applicable to FII/ FPIs in September 2015, the Indian Government has further decided to amend the Income-tax Act, 1961 (IT Act) to settle the controversies around applicability of MAT provisions to foreign companies. (Global Tax Update:October 2015/India)

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1. Minimum Alternate Tax (MAT) not applicable to foreign companies not having a permanent establishment / place of business in India

The government has clarified vide the press release that MAT provisions would not be applicable to foreign companies that do not have a permanent establishment or a place of business in India. Further, it has been clarified that the amendment (which is yet to be carried out) would be retrospectively applicable from 1 April 2001.

2. Delhi High Court ruling on withholding tax obligations in respect of sums that have not been acknowledged as debt

Under the IT Act, any person responsible for paying any sum chargeable to tax in India to a non-resident, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, withhold taxes at source thereon at the rates in force.

3. Bangalore Tribunal (ITAT) ruling on disallowance of expenditure on account of non-deduction of taxes when nil / lower withholding certificate from tax authorities is available

Bangalore ITAT in a recent decision held that no disallowance can be made in the computation of taxable income of Indian entity in respect of payments made without deduction of tax based on a ‘nil’ withholding certificate obtained from the tax authorities.

4. Extension of due date for filing of tax returns for FY 2014-15

Pursuant to the order of various High Courts, the CBDT has extended the due date for filing of tax return and tax audit reports up to 31 October 2015 for all tax payers across India.


>> Click for Japanese [最低代替税(MAT):恒久的施設(PE)または事業を行う場所をインドに持たない外国法人には適用されず ほか]

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