The Taxation Laws (Amendment) ordinance 2019 introduced the following New Section 115BAA and Section 115BAB.
Section 115BAA is applicable for existing companies, Section 115BAB is applicable for companies formed on or after1st October 2019.
Both the New sections did not permit the assesses to avail the benefits / incentives available in Sections 32(1)(ii), 32AB, 33AB,33ABA,35(2AB),35AD,35CCC,35CCD and deductions under chapter VI A other than 80 JJAA if such companies opt to pay tax under these sections.
Though the section 115BAA denied the benefits / incentives, did not spell out the allow ability of MAT credit against tax computed under Section 115BAA of the Income tax Act.
At this juncture, we will analyse MAT tax paid under Section 115JB and the provisions of Section 115JAA of the Income tax Act.
On analysis of Section 115JAA of the act, it is clear that, MAT credit can be set off against the tax computed under the provisions other than 115JB of the act.
The relevant point to be mentioned here is, whether tax paid under section 115JB can be set off against the tax payable under section 115BAA of the act.
The following are relevant for the purpose of the set off of the MAT credit
Tax to be paid under section 115BAA can be construed as Tax paid under the Provisions of the act other than section 115JB.
Here we need to consider amendment made in section 5A of section 115JB of the Income tax act which excludes the applicability of this section 115JB on book profits of companies opted to pay tax under section 115BAA of the Income tax act.
Section 115JAA(5) talks about comparison of tax on total income under provisions other than 115JB however amended section 115JB talks about non applicability of Section 115JB to section 115BAA of the Income tax at.
Hence, in order to avail tax credit we can compute Tax on Total Income under Section 115BAA and compute tax on book profit under section 115JB only for comparison purpose, and avail the MAT credit available to the extent of difference between the tax U/s 115BAA and U/s 115JB.
|MAT Credit Available||Rs. 200 Cr|
|Book Profit||Rs. 2000 Cr|
|Tax Under Section 115JB @ 17.01||Rs. 340 Cr|
|Total Income Under Section 115BAA||Rs. 1900 Cr|
|Tax Under Section 115BAA @ 25.17%||Rs. 478 Cr|
|Difference between Tax U/s 115BAA and U/s 115JB||Rs. 138 Cr|
Since the available MAT credit is Rs. 200 Cr, the same can be adjusted to the extent of Rs. 138 Cr.
Also Read relevant Press Releases and Notifications