Impact Of Ind AS Adoption On MAT

Introduction

Considering the applicability of the Indian Accounting Standards (Ind AS) to various classes of companies covered under the roadmap issued by the Ministry of Corporate Affairs (MCA), a much needed amendment has now been introduced in Section 115JB of the Income Tax Act, 1961 (hereinafter referred to as 'Section 115JB'). This amendment brings a horizontal equity across companies, irrespective of the fact whether they follow Ind AS or the existing GAAP for computing book profits under Section 115JB for the purpose of Minimum Alternate Tax (MAT). The companies that have adopted Ind AS will be finalising their first financial statements as per Ind AS for year ended 31 March 2017. The amendments in the income tax provisions will enable these companies to compute the book profits for the determination of tax liability under MAT.