Abc pvt ltd has book profit of 7,10,000 for the year ending 31.03.2021 .. Company has brought forward losses and unabsorbed depreciation of year FY 2018-2019 ..
Can ABC pvt ltd company set off brought losses and unabsorbed dep against profit as per MAT ..?
If yes , then please correct me if i am wrong..
Set off will be lower of :
a) Brought forward business loss
b) Brought forward Unabsorbed depreciation
Query regarding computation of tax under MAT
Replies (1)
| Yes, brought-forward book losses and unabsorbed depreciation can be set off against book profit under MAT, but with specific rules: 1. Section 115JB(2)(iii): Book profit is computed after deducting the lower of: (a) The amount of loss brought forward (as per books of account), OR (b) The amount of unabsorbed depreciation ..as per the company's books. This is NOT the IT Act loss — it is the book loss/depreciation as per financial statements. 2. Deduction Available: Lower of book loss b/f OR unabsorbed book depreciation is deductible. If one is nil (e.g., no book depreciation), only the book loss is deductible (or vice versa). They are not both deducted — only the lower of the two. 3. For FY 2018-19 Losses: Yes, you can carry forward book losses and set off in subsequent years under MAT, subject to the above condition. There is no time limit for MAT credit, though MAT credit (excess of MAT over normal tax) itself can be carried forward for 15 years under Section 115JAA. 4. Example: Book profit Rs. 7,10,000. Book loss b/f Rs. 3,00,000. Unabsorbed book depreciation Rs. 5,00,000. Lower = Rs. 3,00,000. MAT book profit after adjustment = Rs. 7,10,000 - Rs. 3,00,000 = Rs. 4,10,000. MAT @ 15% + surcharge + cess applies on Rs. 4,10,000. |
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