MAT Provisions Relaxed for Companies Declared Insolvent

MAT Provisions Relaxed for Companies Declared Insolvent:

Important amendment in MAT provisions for companies under insolvency

• For companiesagainst whom an application for corporate insolvency resolution process has been admittedunder the Insolvency and Bankruptcy Code, 2016.

Existing provisions of section 115JB of the Income-tax Act, 1961 For the purposes of levy of Minimum Alternate Tax (MAT) in case of acompany, the amount of loss brought forward or unabsorbed depreciation, whichever is lessas per books of account shall be reduced from the book profit.

Relaxation in the provisions relating to levy of Minimum Alternate Tax (MAT) in case of companies against whom an application for corporate insolvency resolution process has been admitted under the Insolvency and Bankruptcy Code, 2016

Section 7 of IBC,2016 -Initiation ofcorporateinsolvencyresolutionprocess byfinancialcreditor. Section 9 of IBC,2016 -Applicationfor initiationof corporateinsolvencyresolutionprocess byoperationalcreditor. Section 10 of IBC,2016 -Initiation ofcorporateinsolvencyresolutionprocess bycorporateapplicant.

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Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

New Delhi, 6th January, 2018

PRESS RELEASE

Relaxation in the provisions relating to levy of Minimum Alternate Tax (MAT) in caseof companies against whom an application for corporate insolvency resolutionprocess has been admitted under the Insolvency and Bankruptcy Code, 2016. 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 acompany, the amount of loss brought forward or unabsorbed depreciation, whichever is lessas per books of account shall be reduced from the book profit. In this regard, representations have been received from various stakeholders that thecompanies against whom an application for corporate insolvency resolution process hasbeen admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of theInsolvency and Bankruptcy Code, 2016 (the IBC), are facing hardship due to restriction inallowance of brought forward loss for computation of book profit under section 115JB of theAct. With a view to minimize the genuine hardship faced by such companies, it has been decided,that, with effect from Assessment Year 2018-19 (i.e. Financial Year 2017-18), in case of acompany, against whom an application for corporate insolvency resolution process has beenadmitted 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 beallowed to be reduced from the book profit for the purposes of levy of MAT under section115JB of the Act. Appropriate legislative amendment in this regard will be made in due course.

(Surabhi Ahluwalia)

Commissioner of Income Tax (Media & Technical Policy)

Official Spokesperson, CBDT

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