ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • India
    • Economy
    • Politics
    • Markets
  • World
    • Economy
    • Politics
    • Markets
  • Companies
    • Auto
    • Banking & Financial Services
    • Pharma
    • Energy
    • Infrastructure
    • Media
    • IT
    • Telecom
    • Consumer Products
    • Aviation
    • FMCG
  • Personal Finance
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
  • Mutual Funds
  • Technology
  • Automobile
    • Cars
    • Bikes
  • Small Business
    • SME
    • Startups
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
    • AUTHORS
Home » Union Budget News

Corporates anxiously await govt stand on MAT, AMT in upcoming Budget

Initially, the MAT was introduced for companies and was later made applicable to all other taxpayers in the form of AMT.

  • Twitter
  • Facebook
  • GPlus
Corporates anxiously await govt stand on MAT, AMT in upcoming Budget
Representational Image: Photo: Pixabay
By ZeeBiz WebTeam
Updated: Tue, Jan 09, 2018
11:40 am
Mumbai, ZeeBiz WebDesk
RELATED NEWS
National Pension Scheme subscriber? Know what will change after Budget 2019, how you will benefit National Pension Scheme subscriber? Know what will change after Budget 2019, how you will benefit
First sale of electoral bonds via SBI to begin from March 1 First sale of electoral bonds via SBI to begin from March 1
Skoda to hike prices by up to Rs 35,000 from March Skoda to hike prices by up to Rs 35,000 from March
Farmers' incomes have declined 1.38% since 2014: Yashwant Sinha Farmers' incomes have declined 1.38% since 2014: Yashwant Sinha
Market rout erodes Rs 9.6 Lakh crore investor wealth in 3 days Market rout erodes Rs 9.6 Lakh crore investor wealth in 3 days

As the date for Budget 2018 is inching closer, corporate groups would be eyeing the government's stand on the Minimum Alternative Tax (MAT) and Alternative Minimum Tax (AMT).
 
In the last Budget, the Finance Ministry, in a major relief, decided to carry forward the period of MAT and AMT by five more years.
 
Finance Minister Arun Jaitley had said, “With a view to provide relief to the assessees paying MAT, it is proposed to amend section 115JAA to provide that the tax credit determined under this section can be carried forward up to fifteenth assessment years immediately succeeding the assessment years in which such tax credit becomes allowable."
 
The proposal was widely appreciated. Ameen Khwaja, Founder & CEO, LatestOne.com, said: “Push for digital economy is a positive step towards Digital India. However, was expecting more benefits for startups and MSMEs. Few benefits are good like - the increase in the tax break segment, MAT can be carried forward to 15 years and 5% reduction in income tax for MSMEs."
 
Let us try to understand the difference between MAT and AMT, and also the expectations from the government in the upcoming Union Budget.
 
Minimum Alternative Tax
 
Under Income Tax Act, the MAT has been introduced to target those companies, including foreign companies, that make huge profits and pay dividend to their shareholders but do not pay minimal tax by taking advantage of various deductions and exemptions.
 
With MAT, now such companies are liable to pay a fixed percentage of their profits.
 
Tax liability, as per normal provisions of IT Act, is usually 30% plus 3% education cess plus surcharge if applicable for companies. However, tax liability in MAT is lower as per Section 115BJ – that is 18.5% of book profits plus 3% education cess plus surcharge if applicable.
 
When a company pays tax as MAT, then that firm can also claim the credit of such tax paid in accordance with provisions of Section 115JAA. However, no interest is paid on the tax credit by the department.
 
Such tax credit carries forward for 15 assessment years now (after Budget announcement) from previous 10 assessment years.
 
This assessment year immediately succeeds the assessment year in which such credit is become allowable. For example, if the excess tax is paid in FY2016-17, the credit of such tax gets carried forward in FY2017-18.
 
According to ClearTax report, tax credit shall be allowed to set off in a year when tax becomes payable on the total income in accordance with the normal provisions of the Act.
 
Then the set off shall be allowed to the extent of difference between tax on the total income under normal provision and tax would have been payable as per MAT u/s 115JB.
 
Alternative Minimum Tax
 
AMT is computed on the adjusted total income of a non-corporate assessee, as per Section 115JC of IT Act, 1961.
 
AMT was introduced in the Act for reaching and collecting minimum taxes from the above mentioned assessee who are claiming certain profit linked deductions.
 
It is payable when tax as per normal provisions is less than AMT or adjusted total income.
 
The assessee should claim deduction under

  • Chapter VI heading C (Deductions in respect of certain incomes except u/s 80P) or
  • Under Section 10AA (Profit derived by SEZ Units) or
  • Section 35AD (Deduction for expense on specified business)

 
For assessment year 2017-18, the basic rate of AMT is set at 18.5%, which is increased by surcharge and education & secondary higher education cess.
 
If in any year AMT is payable then the difference between the Normal Tax Payable and AMT paid is allowed as AMT credit and can be adjusted with normal tax liability in subsequent/future year in which the normal income tax payable exceeds the AMT.
 
According to Taxguru, Section 115JC lays down that an assessee liable to AMT should obtain a report in a prescribed format from an Chartered Accountant, certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provisions of Chapter XIIBA and furnish the same on or before the due date of filing of the return u/s. 139(1).
 
What can be expected?
 
On January 06, 2018, the Finance Ministry decided to grant relaxation to companies against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under Section 7 or Section 9 or Section 10 of the Insolvency & Bankruptcy Code.
 
The decision came after the Ministry came to know from various stakeholders that the companies against whom an application for corporate insolvency resolution process has been admitted, are facing hardship due to restriction in allowance of brought forward loss for computation of book profit under Section 115JB of the Act.
 
The Ministry added that the changes will be in effect from assessment year 2018-19, so a view can be expected from the upcoming Budget.
 
The Ministry has stated that the amount of total loss brought forward (including unabsorbed depreciation) shall be allowed to be reduced from the book profit for the purposes of levy of MAT under Section 115JB of the Act.
 

TAGS:
Union BudgetUnion Budget latest newsUnion Budget 2017Union Budget 2018EconomyInsolvency & Bankruptcy CodecorporatesMinimum Alternative TaxAlternative Minimum TaxMATAMTIncome Tax DepartmentIT Actcorporate taxestax payersBudget Expectations
RELATED NEWS
National Pension Scheme subscriber? Know what will change after Budget 2019, how you will benefit National Pension Scheme subscriber? Know what will change after Budget 2019, how you will benefit
First sale of electoral bonds via SBI to begin from March 1 First sale of electoral bonds via SBI to begin from March 1
Skoda to hike prices by up to Rs 35,000 from March Skoda to hike prices by up to Rs 35,000 from March
Farmers' incomes have declined 1.38% since 2014: Yashwant Sinha Farmers' incomes have declined 1.38% since 2014: Yashwant Sinha
Market rout erodes Rs 9.6 Lakh crore investor wealth in 3 days Market rout erodes Rs 9.6 Lakh crore investor wealth in 3 days

LATEST NEWS

Taxpayers Alert! Check out these 8 new features at GST Portal: Here's how easy GSTR filing gets for you

Maruti Suzuki WagonR EV ready for 2020 launch: Check expected price, other features

GMR, Terna sign concession agreement for new airport in Greece

Facebook meeting shows challenges ahead for proposed 'oversight board'

Yamaha launches 2019 MT-09 in India - From price to specs, check key details

Xiaomi Redmi Note 7 to be Flipkart exclusive in India, launch on February 28

Apple teams with Ant Financial, banks for interest-free iPhone financing in China

Another RBI rate cut on cards? Why home, personal, auto loan takers should expect more cheers

Asset management giant IDFC launches equity hedge tactical fund 'IDFC India'

Tesla starts Model 3 delivery in China earlier than expected

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • Amazon Prime Day
  • Income Tax
  • Bharti Airtel
  • NPA
  • Home Loan

Trending Topics

  • Farm Loans
  • 7th Pay Commission
  • Sanitary Pads
  • National Stock Exchange
  • GST

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved