Minimum Alternate Tax (“MAT”) credit under Section 115JAA and Alternate Minimum Tax (“AMT”) credit are tax attributes that can be carried forward. In an NCLT scheme, the question is whether the credit is available to the transferee company, and under what conditions.
The MAT Credit
The MAT credit is the excess of the MAT paid over the normal tax, and it can be carried forward for fifteen years. In an amalgamation, the transferee company may be entitled to the transferor company’s MAT credit where the amalgamation satisfies the conditions of Section 72A. The credit is not automatically transferred; the transferee company must claim it in its return, and the assessing officer must verify the conditions.
The AMT Credit
The AMT credit is available to a non-corporate assessee, and it is not relevant to a company. The LLP that converts into a company may lose the AMT credit, because the credit is not transferable to the company.
The Practical Issues
The scheme should identify the MAT credit that is available, quantify it, and provide for its treatment. The transferee company should obtain the transferor company’s tax records and the evidence of the MAT payments. The credit should be claimed in the return, and the assessing officer’s acceptance should be obtained.
A technically sound scheme addresses the MAT credit as part of the tax chapter, and it does not assume that the credit is automatically transferred.
Call to Action
Anuj Desai & Associates advises companies on the MAT and AMT credit aspects of an NCLT scheme—from the credit quantification and the Section 72A conditions to the return claim and the assessing officer’s acceptance. If your scheme involves a significant MAT credit, we can help you preserve it.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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