MAT EXEMPTION
This query is : Resolved
12 June 2009
can there be exemption for companies coming under section 10a,10b for MAT
12 June 2009
Till last budget it was there, but now from finance bill 2008 all above entites are covered u/s 115JB i.e MAT.
13 June 2009
CAN U PLEASE GIVE ME THE RELEVANT SECTION FROM WHERE I WILL GET THIS DATA
03 August 2024
Under the Income Tax Act, 1961, the applicability of Minimum Alternate Tax (MAT) to companies enjoying tax exemptions under sections 10A and 10B was indeed modified in the Finance Bill of 2008. Here's a detailed explanation along with the relevant sections:
### Key Points:
1. **MAT Applicability to Tax-Exempt Entities:**
- Before the Finance Act, 2008, companies enjoying tax holidays under sections 10A and 10B were exempt from MAT.
- The Finance Act, 2008, brought these entities under the purview of MAT.
2. **Relevant Sections:**
- **Section 115JB:**
This section pertains to the Minimum Alternate Tax. It mandates that companies must pay MAT if their tax liability computed under the Income Tax Act is less than 18.5% of their book profit.
- **Section 10A and 10B:**
These sections provided tax exemptions to certain companies. Section 10A pertains to newly established units in Special Economic Zones (SEZs), while Section 10B applies to 100% Export-Oriented Units (EOUs).
- **Finance Act, 2008:**
The Finance Act, 2008, introduced amendments to include MAT provisions under section 115JB for companies availing benefits under sections 10A and 10B. This was done to ensure that companies claiming tax exemptions would still be subject to MAT if their book profits exceeded the tax calculated under the regular provisions.
### Relevant Legal Provisions:
- **Section 115JB(2):**
This section was amended by the Finance Act, 2008, to include the applicability of MAT to companies claiming exemptions under sections 10A and 10B. The amendment reads:
- **“Notwithstanding anything to the contrary contained in this Act, every company, other than a company referred to in section 10A or section 10B, shall, for the purpose of this section, be deemed to have paid tax in accordance with the provisions of this section.”**
- **Section 10A and 10B:**
While these sections provide tax exemptions, the amended section 115JB ensures that companies availing these exemptions must still calculate MAT on their book profits.
### How It Affects Companies:
1. **Calculation of MAT:**
- Companies availing exemptions under sections 10A and 10B must compute their MAT liability based on their book profits as per section 115JB, irrespective of their tax exemptions under sections 10A and 10B.
2. **MAT Credit:**
- Any MAT paid can be carried forward as MAT credit and set off against regular tax liability in future years.
### Practical Implications:
- **Tax Exemption Under Sections 10A and 10B:**
Companies eligible for exemptions under these sections must still comply with MAT requirements. This means they need to compute their book profits and ensure that they pay MAT if their tax liability under regular provisions is less than the MAT amount.
- **Compliance:**
It is crucial for such companies to maintain accurate records of book profits and compute MAT accordingly. MAT credit can be carried forward if it exceeds the regular tax liability.
### Conclusion:
The Finance Act, 2008, brought companies enjoying benefits under sections 10A and 10B under the ambit of MAT, as per section 115JB. For detailed understanding, you should refer to the specific amendments in the Finance Act and the Income Tax Act.
For the exact text of the Finance Act, 2008, and the relevant sections, you can refer to:
- **[Finance Act, 2008](https://incometaxindia.gov.in/pages/tax-laws/finance-acts.aspx)**
- **[Income Tax Act, 1961](https://incometaxindia.gov.in/pages/tax-laws/income-tax-act.aspx)**
### Key Points:
1. **MAT Applicability to Tax-Exempt Entities:**
- Before the Finance Act, 2008, companies enjoying tax holidays under sections 10A and 10B were exempt from MAT.
- The Finance Act, 2008, brought these entities under the purview of MAT.
2. **Relevant Sections:**
- **Section 115JB:**
This section pertains to the Minimum Alternate Tax. It mandates that companies must pay MAT if their tax liability computed under the Income Tax Act is less than 18.5% of their book profit.
- **Section 10A and 10B:**
These sections provided tax exemptions to certain companies. Section 10A pertains to newly established units in Special Economic Zones (SEZs), while Section 10B applies to 100% Export-Oriented Units (EOUs).
- **Finance Act, 2008:**
The Finance Act, 2008, introduced amendments to include MAT provisions under section 115JB for companies availing benefits under sections 10A and 10B. This was done to ensure that companies claiming tax exemptions would still be subject to MAT if their book profits exceeded the tax calculated under the regular provisions.
### Relevant Legal Provisions:
- **Section 115JB(2):**
This section was amended by the Finance Act, 2008, to include the applicability of MAT to companies claiming exemptions under sections 10A and 10B. The amendment reads:
- **“Notwithstanding anything to the contrary contained in this Act, every company, other than a company referred to in section 10A or section 10B, shall, for the purpose of this section, be deemed to have paid tax in accordance with the provisions of this section.”**
- **Section 10A and 10B:**
While these sections provide tax exemptions, the amended section 115JB ensures that companies availing these exemptions must still calculate MAT on their book profits.
### How It Affects Companies:
1. **Calculation of MAT:**
- Companies availing exemptions under sections 10A and 10B must compute their MAT liability based on their book profits as per section 115JB, irrespective of their tax exemptions under sections 10A and 10B.
2. **MAT Credit:**
- Any MAT paid can be carried forward as MAT credit and set off against regular tax liability in future years.
### Practical Implications:
- **Tax Exemption Under Sections 10A and 10B:**
Companies eligible for exemptions under these sections must still comply with MAT requirements. This means they need to compute their book profits and ensure that they pay MAT if their tax liability under regular provisions is less than the MAT amount.
- **Compliance:**
It is crucial for such companies to maintain accurate records of book profits and compute MAT accordingly. MAT credit can be carried forward if it exceeds the regular tax liability.
### Conclusion:
The Finance Act, 2008, brought companies enjoying benefits under sections 10A and 10B under the ambit of MAT, as per section 115JB. For detailed understanding, you should refer to the specific amendments in the Finance Act and the Income Tax Act.
For the exact text of the Finance Act, 2008, and the relevant sections, you can refer to:
- **[Finance Act, 2008](https://incometaxindia.gov.in/pages/tax-laws/finance-acts.aspx)**
- **[Income Tax Act, 1961](https://incometaxindia.gov.in/pages/tax-laws/income-tax-act.aspx)**
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