BENGALURU: The government announced tax relief to foreign investors, exempting income from securities transactions, royalties, and technical service from the contentious minimum alternative tax.
The tax, which continues to be effective retrospectively on foreign institutional investors, who are fighting it in court, will not apply to on sale of units of real estate investment trusts, Jaitley said replying to the debate in the Lok Sabha on the Finance Bill, which contains the government's tax proposals for the current fiscal.
MAT will also not be applicable on earnings from royalties and technology fees, he added.
The finance minister, however, said the exemptions would apply only in those cases where the normal tax rate is below 18.5 percent.
Commenting on the development, Jasmeet Chhabra, managing partner, Religare Global Asset Management, said: "Sale of units of REIT in any case are to be treated akin to sale of listed security, which should not attract tax. By leaving the ambiguity pertaining to REITs, it was only killing the incentive for asset owners to access capital through REIT."
"Hence the clarification issued, though welcome, is not of much relief or motivation. The contentious issue of MAT at the time of transfer of shares in lieu of REIT units continues, which will make such transactions expensive," Chhabra said in a statement.
Jaitley also cut the export duty on some grades of iron ore from 30 percent to 10 percent, and raised the basic customs duty on natural rubber.
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