No MAT Credit Available If Domestic Company opts for Concessional Tax Regime: CBDT [Read Circular]

The Central Board of Direct Taxes ( CBDT ) has issued clarifications in respect of option exercised under Section 115BAA of the Income Tax Act, 1961 inserted through the Taxation Laws (Amendment) Ordinance, 2019.

The Ordinance amended section 115JB of the Act relating to Minimum Alternate Tax ( MAT ) so as to, inter alia provide that the provisions of said section shall not apply to a person who has exercised the option referred to under newly inserted section 115BAA:

1. Allowability of brought forward loss on account of additional depreciation; and
2. Allowability of brought forward MAT Credit.

The CBDT clarified that, as regards allowability of brought forward loss on account of additional depreciation. it may be noted that clause (i) of sub-section (2) of the newly inserted section 115 BAA. infer alia. provides that the total income shall be computed without claiming any deduction under clause (iia) of sub-section ( I) of section 32 (additional depreciation): and clause (ii) of the said sub section provide that the total income shall be computed without claiming set off of any loss carried forward from any earlier assessment year if the same is attributable interalia to additional depreciation.

Therefore, a domestic company which would exercise option for availing benefit of lower tax rate under section 115BAA shall not be allowed to claim Set off of any brought forward loss on account of additional depreciation for an Assessment Year for which the option has been exercised and [or any subsequent Assessment Year.

The CBDT also said that, there is no timeline within which option under section 115BAA can be exercised. it may be noted that a domestic company having brought forward losses on account of additional depreciation may, if it so desires, exercise the option after set-off of the losses so accumulated.

As regards allowability of brought forward MAT credit, it may be noted that as the provisions of Section 115JB relating to MAT itself shall not be applicable to the domestic company which exercises option under Section 115BAA. it is hereby clarified that the tax credit of MAT paid by the domestic company exercising option under section 115BAA of the Act shall not be available consequent to exercising of such option.

Further, as there is no lime line within which option under section 115BAA can be exercised, it may be noted that a domestic company having credit of MAT may, if it so desires exercise the option after utilising the said credit against the regular tax payable under the taxation regime existing prior to promulgation of the ordinance, the board also added.