New Delhi: Asset financing non banking
financial companies today asked the Finance Ministry to remove
the current provision of the draft Direct Taxes Code on
minimum alternate tax which seeks to levy tax on gross assets.
"NBFCs do not enjoy any of the exemptions/deductions
present in the DTC. Against this backdrop, our plea to the
ministry is to exempt the NBFCs from MAT.
"Alternatively the present provisions relating to MAT
liability as linked to book profits should be reinstated,"
the Chairman of Finance Industry Development Council, a self
regulatory body for NBFCs, T T Srinivasaraghavan, said.
Under the proposed provisions of the Direct taxes Code,
NBFCs would be liable to pay Minimum Alternate Tax (MAT) at 2
per cent on the value of the gross assets held as on the close
of the financial year and the amount is higher than the
corporate tax payable on taxable income.
Non Banking Finance Companies (NBFCs) supplement the
banking industry so it is important to treat NBFCs at par with
the banks from a tax perspective as well, Srinivasaraghavan
With regard to tax deduction at source (TDS) provisions,
he said that the NBFC sector bears the brunt with a higher
rate of TDS, where the amount of TDS on their interest income
is even more than the net margin earned.