Budget 2012- Provisions of MAT & AMT

[Swati Dodhi]

Provisions Of Minimum alternate tax (MAT) – Budget 2012

Profit and loss accounts as per applicable regulatory provisions

• In regard to the provisions of the Income-tax Act with the Companies Act, companies such as insurance, banking, electricity, will be able to prepare profit and loss account as per applicable provisions, for the purpose of computing their book profit. These companies need not necessarily prepare their profit and loss account as per Schedule VI of the Companies Act.

Revaluation reserve relating to revalued asset which is retired or disposed

• Book profit for calculating MAT will also be increased by the revaluation reserve relating to retirement or disposal of the revalued assets, where such revaluation reserve is not credited to profit and loss account.

Deletion of Part III of Schedule VI of Companies Act

• The revised Schedule VI under the Companies Act does not include Part III. In order to follow the provisions of the Income-tax Act with the Companies Act, reference to Part III of Schedule VI of Companies Act will be deleted from section 115JB.

Provisions Of Alternate minimum tax (AMT)– Budget 2012

AMT on all persons other than companies

• Presently, only LLPs are subject to AMT at the rate of 18.5% (plus education cess) of the adjusted total income, if the regular income-tax payable is less than the AMT.
• Now, any person (other than company), claiming deduction under the following section(s) (other than section 80P) will be subject to AMT:

1. Section(s) under Chapter VI-A under the Heading “C – Deductions in respect of certain incomes”
2. Section 10AA (deduction in respect of profits of SEZ units).

  The above provision will not apply to an individual, HUF, association of persons, body of individuals or an artificial juridical person if the adjusted total income does not exceed Rs 2 million.

Consequential amendments have been made in provisions relating to tax credit for AMT, self assessment tax, interest payment provisions, etc.