NBFCs oppose MAT provision in direct tax code
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Last Updated: Friday, October 09, 2009, 23:44
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 added.

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.

Bureau Report

First Published: Friday, October 09, 2009, 23:44

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