MinFin allows companies which has been admitted by Adjudicating Authority for corporate insolvency resolution process under Section 7 or 9 of Insolvency and Bankruptcy Code, 2016 to carry forward the amount of total losses (including unabsorbed depreciation) to be reduced from the book profit for the purposes of levy of Minimum Alternate Tax (MAT) u/s 115 JB of Income Tax Act, 1961. The above will be in effect from Assessment Year 2018-19 (i.e. Financial Year 2017-18).
The above decision has been taken place to ease the hardship due to restriction in the allowance of brought forward loss for computation of book profit u/s 115 JB by the Act faced by companies against whom an application for corporate insolvency resolution process has been admitted by NCLT.
MinFin further highlights that the existing provision of Sec. 115 JB of the Act provides that for the purposes of levy of MAT in case of a company, the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account shall be reduced from the book profit.