Govt relaxes provisions relating to levy of MAT for companies in insolvency resolution process

1/8/2018

Agencies, New Delhi With a view to minimise the genuine hardship faced by companies, Government has decided that with effect from Assessment Year 2018-19 (i.e. Financial Year 2017-18), in case of a company, 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 IBC, 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. According to a statement issued by Central Board of Direct Taxes (CBDT), appropriate legislative amendment in this regard will be made in due course. The existing provisions of section 115JB of the Income-tax Act, 1961 (‘the Act’), inter alia, provide, that, for the purposes of levy of Minimum Alternate Tax (MAT) in case of a company, the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account shall be reduced from the book profit. In this regard, Government received representations from various stakeholders that the 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 and Bankruptcy Code, 2016 (‘the IBC’), are facing hardship due to restriction in allowance of brought forward loss for computation of book profit under section 115JB of the Act.

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