INCOME TAX RETURN OF PRIVATE LIMITED COMPANY - ITR 6 - Income Tax

Sir/Ma'am,

A private limited company having Profit of Rs 79 lacs in the Financial Year 2020 - 2021(Applying Old Regime for Taxation)

Brought Forward Loss is of Rs 2 crores. MAT Credit of Rs 6.88 lacs of earlier years and Unabsorbed Depreciation is Rs 6 lacs.

In ITR,

Profit of Rs 79 lacs is set off against Loss of earlier years but the Profit of Rs 79 lacs is shown as deemed income u/s 115JB and Tax Calculated as per 115JB (including Cess and Interest - Rs 12,86,004/-

Kindly guide us on following:

1) Is MAT Credit and Unabsorbed Depreciation can be utilized against the Tax Payable ?

2) Is MAT Tax need to be pay if the Profit of private limited company has been set off against Losses of Earlier Years ?

Hi Sunil,

Here’s a detailed response to your queries regarding ITR-6, MAT, brought forward losses, and credits for a private limited company:

1) Can MAT Credit and Unabsorbed Depreciation be utilized against the Tax Payable?

MAT Credit (Minimum Alternate Tax Credit):
- Yes, MAT credit can be carried forward for 15 years and utilized to offset regular tax liability in future years when normal tax exceeds MAT.
- However, in the year MAT liability arises (i.e., when tax is computed under section 115JB), MAT credit cannot be utilized to reduce the MAT liability itself. It is available only to set off the excess tax paid in earlier years when you pay regular tax in subsequent years.
Unabsorbed Depreciation:
- Unabsorbed depreciation is allowed to be carried forward indefinitely and can be set off against any income in subsequent years, including book profit for MAT purposes.
- For MAT purposes, unabsorbed depreciation can be deducted from Book Profit while computing MAT under section 115JB.

2) Is MAT tax payable if the profit is set off against brought forward losses?

MAT is payable on "book profit" under section 115JB regardless of whether the company has set off losses as per Income Tax Act.
So even if the company has unabsorbed losses or brought forward losses that reduce the taxable income to zero or negative, MAT liability will still arise if the book profit is positive.
Book Profit is computed as per section 115JB and is different from taxable income computed under normal provisions after set off of losses.
Hence, MAT liability is computed on book profit irrespective of brought forward losses.
This is why MAT liability arises even when normal income tax (under old regime) is NIL due to loss set off.

Summary:

Aspect	Tax Effect
Brought Forward Losses	Set off against taxable income (normal tax)
Book Profit (for MAT)	MAT computed on this, ignoring loss set off
MAT Credit	Can be utilized against normal tax liability in future years, not to reduce current MAT
Unabsorbed Depreciation	Can be deducted from book profit to reduce MAT liability

What should you check/do in ITR?

Ensure Book Profit is correctly computed under 115JB by adding back and deducting appropriate items.
MAT Credit details (Schedule MAT) and Unabsorbed Depreciation details should be reported properly.
Tax computed as per MAT should be shown in Tax Paid & Deducted section with credit for advance tax or TDS if any.
Carry forward and utilization of MAT credit and unabsorbed depreciation will be reflected in schedules.