Union Government has accepted Justice AP Shah Committee report on the Minimum Alternative Tax (MAT) on foreign institutional investors (FIIs).

 By accepting the recommendations, Government will not impose levy on FIIs prior to 1st April 2015 i.e. retrospectively

Key Recommendations

  • There is no legal basis for levying 20 per cent MAT on past capital gains of FIIs.
  • MAT provisions would not be applicable to FIIs that don’t have a place of business or permanent establishment in India.

Implication: This recommendation is considered as a big relief to FIIs as government had exempted them from MAT starting April 1, 2015 in the Union Budget for 2015-16 but had not made the clarification on retrospective imposition.


  • Union Finance Ministry in May 2015 had appointed this a committee by A P Shah
  • The committee was constituted after the tax department had sent legal notices to 68 FIIs demanding around six hundred crore rupees as MAT dues of previous years. This had raked up a MAT controversy within FIIs and they had moved to court challenging this tax imposition.

Definition of MAT

Companies may utilize various exemptions and other provisions of laws to avoid payment of taxes. MAT refers to make a company pay minimum amount of tax.