MAT - Computation of Book Profits - Deductions - Income Tax - Ready Reckoner - Income Tax

The following amounts are to be REDUCED while computing Book Profits:- the amount withdrawn from any reserves or provisions if any such amounts is credited to the statement of profit and loss account; However, any amount withdrawn from any reserve or provision, credited to profit loss account, shall be reduced only if the reserve or provision was created by debiting the profit and loss account. the amount of income to which any of the provisions of section 10 (other than the provisions contained in section 10(38) thereof) or section 11 or section 12 apply, if any such amount is credited to the statement of profit and loss account; The following incomes shall not be liable to MAT and shall be reduced while computing book profits if these are credited to statement of profit loss account : Income exempt under section 10 except section 10(38) Income exempt under section 11 12 Share of profit from an AOP/BOI on which no income tax is payable in accordance with the provisions of section 86 Income to foreign company from interest, dividend, royalty or technical fees chargeable to tax at the rate specified in Chapter XII or capital gain arising on transactions in securities, if income tax payable in respect of these incomes under normal provisions (other than provisions governing MAT) is less than 15% The amount representing notional gain on transfer of a capital asset being share of special purpose vehicle to a business trust in exchange of units alloted by the trust or notional gain from change in carrying amount of such units or gain on transfer of such units, if credited to the statement of profit and loss The Amount of actual loss on transfer of units of business trust ( SP of units Cost of shares of SPV) The amount of income by way of royalty in respect of patent chargeable to tax u/s 115BBF (Inserted by FA, 2016 , w.e.f. 1-4-2017) Income exempt under section 10AA , 10(38) and 80-IA / 80-IAB / 80-IB / 80-IC / 80-ID / 80-IE shall not be reduced while computing the book profits if these are credited to Profit Loss account and shall be liable to MAT. the amount of depreciation debited to the profit and loss account (excluding the depreciation on account of revaluation of assets); the amount withdrawn from revaluation reserve and credited to profit and loss account, to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (c); the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account; Explanation: For the purpose of this clause: LOSS shall not include depreciation If the amount of loss brought forward or unabsorbed depreciation is NIL, then nothing shall be deducted under this clause. the amount of profit of sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the said company has become a sick industrial company under section 17 of the Sick Industrial Companies Act, 1985 and ending with the Assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. the amount of deferred tax, if any such amount is credited to statement of profit loss account. The aggregate Amount of brought forward losses and unabsorbed depreciation of company: - Against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating authority u/s 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016 Company and its subsidiary and the subsidiary of such subsidiary, where, the Tribunal, on an application moved by the CG u/s 241 of the companies Act, 2013 has suspended the BOD of such company and has appointed ne directors who are nominated by the CG under section 242 of the said act. (a company shall be subsidiary of another company, if such other company holds more than half in the nominal value of equity share capital of the company) The amount of profit derived from the activities of a tonnage tax company ( Section 115VO ) NOTES: The company can carry forward losses and depreciation to the extent it could have carried forward had section 115JB not there. The company to which MAT applies shall be liable to pay advance tax, interest under sections 234A, 234B and 234C. The company shall also be liable to pay penalty for concealment of income.