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MAT Exemption for Foreign Firms Spurs Interest and Flings an Opportunity to Find Place of Business

News

Ministry of Finance said that two categories of companies — foreign companies with no permanent establishment in India but based in countries with which India has a Double Taxation Avoidance Agreement, and those with no place of business here — will not be covered under MAT.This move follows the recent decision of the government to exempt foreign financial institutions/foreign portfolio investors from MAT.

Source : Business Line

SNP Insights

Exempting foreign firms from MAT would certainly open new pathways for catalyzing slow paced growth. Companies not having permanent establishment in India were shying away to bust in Indian market due to prevailing tax regime. But, this move of government will provide a helping hand for foreign firms to find a place of business in India and encourage foreign investment in India. With the growing interest of BJP govt in renewables sector and augmented capacity addition requires huge investments, and reduced material costs. This can be only achieved through inhouse production of basic components of system. MAT exemption on the other hand would also help in establishing manufacturing base , eventually contributing to 'Make in India' and giving it a structural framework.

Source: SNP Infra Research