Firms won't be allowed to adjust MAT credit if they opt for lower tax: CBDT

Experts say new tax rates not attractive to companies enjoying tax holidays

The Central Board of Direct Taxes (CBDT) has clarified that companies will not be allowed to adjust the minimum alternate tax (MAT) credit against their tax liabilities if they opt for lower corporation tax rates.

This may make the lower tax rates unattractive to companies enjoying tax holidays, said experts. They also said the circular may lead to litigation.

“It is clarified that the tax credit of MAT paid by the domestic company exercising the option under Section 115BAA of the (Income Tax) Act (those opting for reduced corporation tax rates) shall not be available consequent to exercising of such