The government provided some relief to foreign investors, clarifying on Thursday that minimum alternate tax (MAT) will not apply to capital gains on the sale of securities, royalty, technical service fees and interest income. This was part of amendments made to the Finance Bill by FM Arun Jaitley.
The relief is available only in those cases where the normal tax rate is below 18.5%, the rate at which MAT is levied, and will be available prospectively from the current fiscal, disappointing investors who were looking to the Finance Bill to roll back demands levied for previous years. The relief is available to all types of investors, corporates and private equity included.
Jaitley also eased MAT rules for real estate investment trusts (REITs) and Infrastructure Investments Trusts (InvITs).
The finance minister lowered the export duty on low-grade iron ore to 10% from 30% to boost exports from Goa and revive mining of the commodity in the state. The Lok Sabha later passed the Finance Bill by a voice vote, marking the end of the Budget process for the year.
The new rules will mean REITs and InvITs will not attract MAT when they are set up, clearing a big hurdle in the way of these instruments pitched as vehicles of big-ticket investment in real estate and infrastructure.
Jaitley also exempted from service tax the insurance component of key social sector initiatives such as the Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Jan Dhan Yojana as well as on general insurance business under the Pradhan Mantri Suraksha Bima Yojana.
Jaitley withdrew certain tax exemptions available to defence public sector units and ordnance factory boards to provide a level playing field to the private sector as part of a wider plan to spur the 'Make in India' manufacturing initiative.
Customs duty on raw silk was cut to 10% to address the duty inversion between silk yarn and fabric but that on natural rubber was raised to 25% from 20% to the protect the domestic industry.
Source :The Economic Times
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