New Delhi: The A.P. Shah committee, constituted by the government to look into the controversy over levy of minimum alternate tax on foreign portfolio investors, has decided to seek comments from all stakeholders, including industry bodies.

The committee, which was constituted last week, held its first meeting on Monday.

The committee has sought representations by 22 June following which the committee may call stakeholders for a meeting between 29 June and 6 July, the tax department said in a statement.

The committee will look into the levy of MAT on foreign portfolio investors for the period prior to 1 April and give its suggestions to the government. The government set up the committee after foreign investors opposed the levy of MAT, which is levied on profitable entities that don’t pay corporate income tax because of incentives and exemptions.

Besides Shah, who is the chairman of the Law commission, other members of the committee include Ashok Lahiri, former chief economic adviser in the finance ministry, and Girish Ahuja, former associate professor of commerce at the Shri Ram College of Commerce, University of Delhi.

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.

Foreign investors opposed these notices, arguing that MAT can be levied on book profits of companies and that they do not maintain book of profits in India.

Looking to end the dispute, Jaitley said in his budget speech that MAT will not be applicable on capital gains accruing to foreign portfolio investors from sale of shares starting in 2015-16. But the amendment was prospective, leaving past cases to be decided by judicial authorities.

The matter is expected to reach its finality only when the Supreme Court decides on the applicability of MAT in an appeal filed by Castleton that is likely to come up for hearing in August.

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