Rationalization Of The MAT Provisions To Align For Transfer Pricing Adjustments - CBDT Notifies Rules With A Formula-based Mechanism For Computing MAT Relief

As per the Minimum Alternate Tax (MAT) provisions under Section 115JB of the Income-tax Act, 1961 (the Act), the tax liability of a taxpayer would be higher of the (i) Tax liability of the taxpayer computed as per the normal provisions; or (ii) Tax computed @15%¹ (plus surcharge and cess as applicable) under MAT.

The Finance Act, 2021, inserted Sub-section 115JB(2D) in the Act to provide relief in the computation of MAT, in respect of cases, where there is an increase in book profit of the previous year due to income of past year(s) included in the book profit on account of an Advance Pricing Agreement (APA) entered into by the taxpayer under Section 92CC of the Act or secondary adjustment required to be made under Section 92CE of the Act.