9911796707
TMI BlogAddresses the mechanism for granting tax credit for MAT/AMT paid in excess of regular tax liability by Other than Corporate : Clause 206(13)-(16) of the Income Tax Bill, 2025 Vs. Section 115JD of the Income-taxX X X X Extracts X X X X X X X X Extracts X X X X ..... ellate orders. These provisions are then compared in depth with the existing framework u/s 115JD of the Income Tax Act, 1961. The analysis herein provides a detailed breakdown of the statutory language, legislative intent, operational mechanics, and practical implications for taxpayers, as well as a comparative evaluation highlighting both continuity and divergence between the new and old regimes. Objective and Purpose The legislative intent behind MAT and AMT provisions is to counteract aggressive tax planning that exploits deductions, exemptions, and incentives, resulting in minimal or nil tax liability despite significant accounting profits. The MAT/AMT credit mechanism, as addressed in both Clause 206 (2025 Bill) and Section 115JD (1961 Act), aims to ensure equity by allowing taxpayers to recoup excess MAT/AMT paid during years of low regular tax liability in subsequent years when regular tax liability exceeds MAT/AMT. The credit mechanism thus prevents MAT/AMT from being a sunk cost and aligns the minimum tax regime with principles of fairness and horizontal equity. Sub-clauses (13)-(16) of Clause 206, and the corresponding provisions in Section 115JD, are central to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is otherwise subject to higher regular tax. * Set-Off Quantum: The quantum of set-off is capped at the excess of regular tax over MAT/AMT for the relevant year, preventing over-utilization. * Carry Forward Period: The credit can be carried forward for up to fifteen tax years (aligning with the "assessment year" in the 1961 Act), ensuring a reasonable window for utilization while preventing indefinite accumulation. This structure is designed to balance taxpayer relief with revenue certainty, and is substantially similar to the carry forward and set-off rules in Section 115JD(4)-(5). Clause 206(16): Adjustment of Credit on Reassessment or Appeal This sub-clause addresses the dynamic nature of tax liability, recognizing that assessments may be modified by appellate, revisionary, or rectification orders. It mandates that the MAT/AMT credit allowed must be correspondingly adjusted if the regular tax or MAT/AMT liability for a year changes due to such orders. Key implications: * Ensures accuracy and fairness by aligning MAT/AMT credit with true tax liability as finally determined. * Prevents windfall gains or losses arising from subsequent reassessment or appellate orders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against regular tax. Both provide that the excess is to be ignored in computing MAT/AMT credit, thus preventing manipulation of MAT/AMT credit through aggressive use of FTC. The language and intent are substantially similar, though Clause 206(14) references the new section numbers (159(1)/(2)) corresponding to the new Bill's structure. 4. Interest on MAT/AMT Credit Section 115JD(3) and Clause 206(14)(a) both categorically deny any interest on MAT/AMT credit, maintaining revenue neutrality and administrative simplicity. 5. Carry Forward and Set-Off Period Section 115JD(4) and Clause 206(15) both permit carry forward of MAT/AMT credit for up to fifteen years (increased from ten years by the Finance Act, 2017). The set-off rules are also identical: credit can be set off only in years when regular tax exceeds MAT/AMT, and only to the extent of the excess. 6. Adjustment on Reassessment or Appeal Section 115JD(6) and Clause 206(16) both provide for adjustment of MAT/AMT credit in case the tax liability for a year is modified by an order passed under the Act. This ensures that MAT/AMT credit reflects the final tax positions and prevents discrepancies. 7. Exclusions/Non-Applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T/AMT and regular tax. Section 115JD(2): Excess of AMT paid over regular income-tax. Substantially similar in computation methodology. Interest on Credit Clause 206(14)(a): No interest payable on credit. Section 115JD(3): No interest payable on credit. Identical treatment, reflecting the policy that credit is a relief, not a deposit. Foreign Tax Credit Adjustment Clause 206(14)(b): Excess FTC claimed against MAT/AMT over regular tax to be ignored in credit computation. Section 115JD(2) Proviso: Similar adjustment for excess FTC claimed against AMT over regular tax. Both provisions prevent double benefit of FTC. Clause 206 references section 159 (corresponding to sections 90, 90A, 91 under 1961 Act). Carry Forward Period Clause 206(15): 15 tax years from the year credit arises. Section 115JD(4): 15 assessment years from the year credit arises (earlier 10 years). Both provide for a 15-year carry forward period, ensuring ample opportunity for set-off. Terminology differs ("tax year" vs. "assessment year"), but substance is the same. Set-Off Mechanism Clause 206(15): Set-off allowed to the extent regular tax exceeds MAT/AMT in any year; ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
