India won't yield to foreign investors' demand for tax waiver: finance ministry source

[NEW DELHI] The Indian government will not yield to the demand of foreign portfolio investors for a tax waiver on capital gains of previous years, a top finance ministry official told reporters on Tuesday.

Finance Minister Arun Jaitley had said in his budget speech that capital gains made by foreign investors from April 1, 2015 would be exempted from minimum alternative tax (MAT).

But the exemption does not apply retroactively and US and European investor groups are upset over the Indian tax department's attempts to levy the same.

"Government will not yield to the demand of FIIs (foreign institutional investors) to withdraw tax notices issued to them," said the official, who declined to be named.

Many foreign investors have been receiving notices requesting their MAT calculations for financial year 2011/2012. The tax office has said it would also apply the tax to previous years.

REUTERS