Thursday, October 15, 2015

Government exempts Foreign Companies without permanent establishments from paying MAT

The government has said the controversial Minimum Alternate Tax (MAT) will not apply to foreign companies that do not have a permanent establishment or a place of business in India, putting to rest another lingering tax issue. The government will amend the Income Tax Act, 1961, retrospectively from April 1, 2001, to give effect to this decision and ensure that past cases are not opened. The ministry said Section 115JB, which deals with the levy of MAT, will not apply to a foreign company in two instances.

  • If it is a resident of a country with which India has a double taxation avoidance agreement and it does not have a permanent establishment India. 
  • If the foreign company is a resident of a country with which India does not have a double taxation avoidance agreement but is not required to seek registration under Section 592 of the Companies Act 1956 or Section 380 of the Companies Act 2013.

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