The committee set up by the Central Board of Direct Taxes (CBDT) is considering various options to retain minimum alternate tax (MAT) with the new proposed base of gross assets.

The Direct Taxes code, proposed last year, had recommended shifting the base for calculation of MAT from book profit to gross assets, to make it an investment-linked, and not profit-linked, tax. However, stiff opposition from industry has led to reworking of MAT.

MAT is the minimum tax payable by a company if the normal tax liability of a company is less than 15 per cent of its book profit.

To encourage long gestation projects of 10-15 years, capital-intensive project proposal and asset creation, one of the options being considered is to exclude work-in-progress (WIP) from calculating MAT, while retaining its base as gross assets, said an official source.

This would remove much of the criticism that the MAT based on gross assets is against asset creation. This way, tax will not be applicable on projects or assets yet to be completed.

Second option is to allow MAT credit in line with duty drawbacks or Central VAT (Cenvat) credit for taxes paid on assets yet to be created, or for loss making units, assets and companies. While the total tax is paid in the beginning, refund of the excess tax paid on capital WIP could be taken later.