In the case of every Assessee, being the company covered as per section 115JB of the Act, two parallel computations are contemplated under the provisions of the Income-tax Act, 1961 (for brevity ‘the Act’). One is the computation of total income in accordance with the normal provisions of the Act and, another is the computation of book profit as stipulated as per section 115JB of the Act. Apropos to this, if the income-tax payable on the total income is less than eighteen and one-half per cent of book profit, then the book profit so computed shall be deemed to be total income, and accordingly the Assessee shall be liable to pay tax at the rate of eighteen and one-half per cent thereon. And such tax shall be increased by Surcharge (as per applicable rate) and Health and Education Cess.

While presenting the Budget (No. 2) 2019, the Hon’ble Finance Minister Nirmala Sitharaman has further extended the benefit of reduced corporate tax rate @ 25%, which is applicable to the companies having turnover or gross receipts up to INR 400 Cr. in the previous year 2017-18. As per the data of finance ministry, 99.3% of the companies will take the advantage of this reduced rate. Since the gap of 25% and 18.5% has been reduced against the earlier gap of 30%/29% and 18.5%, thus more companies would now be falling under the purview of MAT provisions of the Act. Also, since the above amendment is applicable for the financial year 2019-20 and the tax is required to be paid through advance tax during the previous year in which income is earned, thus it is a good time to analysis the MAT provisions during financial year instead of at the filing of income tax return.