Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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The Finance Ministry on Wednesday said companies opting for the lower corporate tax rate of 22% will not be allowed to reduce their tax liability by claiming deductions towards additional depreciation and Minimum Alternative Tax (MAT) credits. The Central Board of Direct Taxes (CBDT), in a clarification, said companies will be allowed to utilise such credits only against regular taxes under the old regime and may opt for lower corporate tax regime in the subsequent assessment years. There is no timeline before which the option under newly-inserted 115BAA in the Income Tax Act can be exercised, it added. Under Section 115BAA, it was stated that companies opting for lower tax rate of 22% will not be allowed to claim any deduction or exemption. It gave the companies right to exercise the option before furnishing the income tax return. It was also stipulated that the option, once exercised, cannot be withdrawn in subsequent years. The section does not give any timeline for companies to opt for the new regime of lower tax rate. The CBDT said, “a domestic company which would exercise option for availing benefit of lower tax rate under section 115BAA shall not be allowed to claim set off of any brought forward loss on account of additional depreciation for an assessment year for which the option has been exercised and for any subsequent assessment year.”
