Advanced understanding minimum alternate tax concepts computation of book profits in most easiest manner by mr. Calculation of book profits for the purpose of mat section 115jb. Section 115jb of income tax act, 1961after budget 2016. As per section 115jb, every taxpayer being a company is liable to pay mat, if the incometax including surcharge and cess payable on the total income, computed as per the provisions of the incometax act in respect of any year is less than 18. For the purposes of this section, book profit means the profit as shown in the. Following proviso shall be inserted in subsection 1 of section 115jb by the. As per sub section 1 of section 115jb of the act, if total income of a company in any year commencing from a.
Minimum alternate tax mat us 115jb of income tax act, 1961. Explanation 1 for the purposes of this section book profit means the net. As per explanation to section 115 jb2c, the convergence date is defined as the first day of the first ind as reporting period as defined in ind as. Learn about the purpose of mat, provision of mat as per section 115jb. Cbdt issues faqs on computation of book profit for. As per explanation 1 to section 115jb 2 book profit for the purposes of section 115jb means net profit as shown in the statement of profit and loss prepared in accordance with schedule iii to the companies act, 20 as increased and decreased by certain items. It was also held that provision for doubtful debits is also covered by the. Calculation of book profits for the purpose of mat. Minimum alternative tax mat meaning, applicability. Minimum alternate taxsection 115jbhow to compute arthikdisha. As per explanation 1 to section 115jb2 book profit for the purposes of section 115jb means net profit as shown in the statement of profit.
Book profit financial definition of book profit financial dictionary. Step 1 find out net profit before other comprehensive income oci as per statement of profit and loss of the company. Provisions of the relevant clause iii of explanation1 to section 115jb. Minimum alternate tax part iii computation of book profits. Income tax computed as per provision of section 115jb of income tax act. Calculation of mat credit applicability of minimum alternate tax. As per section 115jb 2, book profit means net profit in the statement of profit and loss prepared in accordance. Regarding the assessees claim of computation of book profit us. Calculation of book profits for the purpose of matmaximum alternate tax section 115jb for computation of book profit, one may proceed as follows. As per explanation 1 to section 115jb2 book profit for the. According to ao, as per books of account, brought forward unabsorbed depreciation is. Tax liability as per the mat provisions are given in sec 115jb18.
Definition of book profit in the financial dictionary by free online english. For the purpose of book profit, an assessee being a company for which the proviso to sub section 2 of section 211 of the companies act, 1956 applies, shall prepare a profit and loss account for the concerned previous year as per the provisions of act for the purpose of section 115jb. The procedure for the computation of book profit as per. This explanation provides that book profit is nothing but is calculated after making some adjustments in the net profit as per the profit and loss account of the company. Meaning of book profit as per explanation 1 to section 115jb 2 book profit for the purposes of section 115jb means net profit as shown in the statement of profit and loss prepared in accordance with schedule iii to the companies act, 20 as increased and decreased by certain items prescribed in this regard. This books profit meaning is provided in explanation 1 of sub section 2 of section 115jb.