MAT extension a benefit for companies

Source: The Economic Times, Feb 02, 2017

MUMBAI: The extension of the minimum alternate tax (MAT) credit carry forward period to 15 years from 10 years may come as a positive step for Indian companies even though there was a strong demand to scrap it, industry experts said.

The extension means MAT could be carried forward in the books of accounts for another five years. Currently MAT is at 18.5% on business income.

“There was an expectation that MAT would be removed completely. However, the increase in carry forward is a positive sign, too, for many companies,” said Samir Gandhi, a partner at Deloitte Haskins & Sells.


The government said it is not practical to remove or reduce MAT at present as the full benefit of its phase-out will be available only after seven to 10 years, when all those already availing of exemptions exhaust them.

Industry experts said this could also be a good step in the context of the new accounting standards, Ind-AS. With the implementation of Ind-AS, many transactions could start attracting MAT and they can now be set off for five years. There was concern that MAT liability would increase due to Ind-AS.

The extension could mean that companies will have a larger window to set off the accounting entry and it could mainly impact infrastructure companies.

“Especially considering the large forthcoming investments in oil and gas, the measure will serve to de-risk some of the infrastructure projects in the sector,” said Anish De, a partner at KPMG in India.

 

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