Minimum Alternate Tax (MAT)
Computation of Book profits for a company broadly similar to that under the existing provisions.
Profit based MAT retained as against the asset based MAT initially proposed @ 2% on gross assets (0.25%in case of banking companies) .
MAT to be levied @ 20% of the adjusted book profits where tax payable on taxable income under normalprovisions of the DTC is lower than such tax. The rate is marginally higher than the existing rate of 18%(plus surcharge and cess).
Credit for MAT paid to be allowed for 15 years as against existing period specified of 10 years.
The code does not provide for credit of MAT paid under the Income tax Act, 1961.
Income from all Investment assets to be computed under the head ‗Capital gains‘. Investment asset to
include any capital asset which is not business capital asset, any security held by a FII and any undertakingor division of a business.
No tax on gains on transfer of shares of a company or unit of an equity oriented fund held for more than oneyear where such transfer is chargeable to STT. STT chargeable on transfer of equity shares of a companyor units of an equity oriented fund.
Fifty percent of capital gains to be allowed as a deduction on transfer of shares of a company or unit ofequity oriented fund held for a period of one year or less where such transfer is chargeable to STT.
Base date for determining cost of acquisition and indexation to be shifted from 1 April 1981 to 1 April 2000.Consequently all unrealized capital gains on assets acquired between 1 April 1981 and 31 March 2000 notto be liable to tax.
The cost of acquisition for various modes of acquisition of shares provided in the Seventeenth Schedule tothe Code.
Capital loss to be allowed to be set off only against capital gains. Capital loss to be carried forwardindefinitely.
Foreign companies liable to tax at 30 % as against existing rate of 40% (plus surcharge and cess).Additional branch profits tax of 15 percent (on post tax income) for income attributable directly or indirectly tothe permanent establishments of the foreign companies in India.
Foreign company is considered resident in India if its place of effective management (as defined) at any timein the year is in India.
Income from transfer of share or interest in a foreign company by a non resident outside India will not bedeemed to accrue in India if the FMV of the assets owned (directly or indirectly) by that company does notexceed 50 % of the FMV of the total assets owned by that company.
Proportionate gains would be taxable in India where any income is deemed to accrue in India to a nonresident by way of transfer of share or interest in a foreign company computed as follows-A * B / CA = Income from the transfer computed under the Code as if the transfer was effected in IndiaB = Fair Market value of the assets in India, owned directly or indirectly by the foreign company