Federation of Gujarat Industries (FGI) here has supported the demand for rewriting the Direct Tax Code (DTC) and do away with changes suggested in Minimum Alternate Tax proposals as it could spell doom for companies.
Addressing members of FGI, Mukesh Patel, a well known tax expert said that presently MAT is charged on book profits but the direct tax code has suggested it be charged on assets which would mean even loss making companies or those facing liquidation would need to pay the tax.
Patel said the new code would not only shun foreign investment coming into India but also drive away Indian entrepreneurs to greener pastures outside the country.
Patel said that the proposed MAT would hit Gujarat based companies like Sardar Sarovar Narmada Nigam Ltd (SSNL) which may face MAT liability of Rs 640 crore while a company like Adani Power may have to pay Rs 560 crore by way of MAT.
SSNL is a company created for raising funds to implement the ambitious Rs 40,000 crore Sardar Sarovar project which is not making any profit while Adani Power is creating assets for power projects which would materialise after many years, Patel pointed out.
Capital intensive projects, infrastructure ventures, undertakings in gestation period , loss making concerns, sick units, investment companies and even companies under liquidation would be hit hard by the proposed changes in MAT, Patel said