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India Announces Relaxation Of MAT Provisions For Insolvent Companies

by Mary Swire, Tax-News.com, Hong Kong

09 January 2018


India's Ministry of Finance on January 6 announced that it would be relaxing provisions relating to the imposition of the Minimum Alternate Tax (MAT) for insolvent companies.

Under the existing rules, for the purposes of levying MAT on a company, the amount of loss brought forward or the amount of unabsorbed depreciation - whichever is less - is deducted from the book profit.

However, the Ministry said it had received feedback that in the case of companies undergoing insolvency proceedings, the rules on the carryforward of losses for the calculation of book profits was causing hardship.

Consequently, the Finance Ministry announced: ''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 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."

Legislation on this is expected to follow the announcement.

TAGS: compliance | tax | tax compliance | India | Tax

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