Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: articles on VAT and GST in India :: VAT Audit :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: TDS :: empanelment :: cpt :: list of goods taxed at 4%
 
 
« News Headlines »
 Income-tax (22nd Amendment) Rules, 2017
 All about Exports under GST
 Have you missed the due date of filing your Tax Returns?
 What you should know about income tax refunds
 Income tax scrutiny to remain limited despite surge in returns filed
 Regarding Filing of online return for first quarter of 2017-18 extension upto 01-09-2017
 Deadline to file returns extended to 28 August for biz with transitional
 GST input tax credit form
  How to rectify income tax returns
 Govt extends tax exemption for industry in North East, hilly states
 Should you file revised Income Tax returns; find out here

MAT holds promise for IT firms
March, 06th 2007

The proposal by finance minister P Chidambaram to extend the minimum alternate tax (MAT) to information technology companies in Budget 2007-08 could well be the governments way of telling them that the tax holiday on export profits would continue beyond 2009. As things stand, software companies will get a refund on the MAT paid over the next two years as credit in the very first year of graduating to the 30%-plus corporate tax regime.

This is how it works: MAT would be levied at 11.33% on the book profits of IT companies for 2007-08 and 2008-09. But the existing tax holiday for these companies available under Section 10A and 10B of the Income-Tax Act for profits earned from export activities expires at the end of assessment year 2008-09. So, the companies lose the shelter of MAT and move to the higher 33.99% corporate tax rate (including education cess and surcharge) in 2009-10.

However, Section 115JAA of the I-T Act allows companies tax credit for MAT paid, immediately upon graduation. Simply put, this means the cumulative MAT paid can be set off against the regular tax liability. The credit is, of course, restricted to the difference between the tax under normal provisions of the income-tax act and the cumulative sum payable under MAT provisions.

As the chart shows, a notional company that pays MAT of Rs 28.33 crore (the entire sum it will pay the government as MAT in the next two years) will get full credit for this amount in 2009-10 against the corporate tax liability of Rs 67.98 crore.

Income-tax experts like Shyamal Mukherjee, executive director, PricewaterhouseCoopers, have interpreted the clutch of provisions as an indication the tax holiday for IT companies will continue beyond 2009. Unless the tax credit provisions are changed in the next Budget, IT companies have no reason to be unhappy, he said. The cash outgo will return as MAT credit, he said. The finance ministry has estimated it could earn over Rs 4,000 crore each year from MAT on IT companies.

MAT was extended in Budget 2007 to cover section 10A and 10B IT companies like Infosys, Wipro, TCS and others. Advisor to finance minister Parthasarathy Shome has said the extension was necessary to ensure a level playing field.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions