Section 115JB(2) mandates that the Statement of Profit & Loss (P&L) for MAT computation must be prepared as per Schedule III of the Companies Act, 2013, with specific adjustments. Below is a structured breakdown:
1. Legal Requirement
- Companies must compute “Book Profit”for MAT (Minimum Alternate Tax) based on:
- Net Profit(as per P&L prepared under Companies Act, 2013).
- Adjustments(additions/deductions) as prescribed in Section 115JB(2).
2. Key Adjustments to Net Profit
Additions (Increasing Book Profit)
- Income Tax Paid/Provided(including MAT, surcharge, cess).
- Dividends Paid/Proposed(including interim dividends).
- Depreciation (Including Revaluation Gains)
- If asset revaluation reserve is credited to P&L.
- Provisions for Unascertained Liabilities(e.g., litigation, warranties).
- Expenses Related to Exempt Income(e.g., Section 10 exemptions).
Deductions (Reducing Book Profit)
- Exempt Incomes(e.g., LTCG under Section 10(38), dividends from foreign subsidiaries).
- Withdrawals from Reserves(if credited to P&L).
- Unabsorbed Depreciation/Losses(for insolvent companies).
3. Example Calculation
| PARTICULARS | AMOUNT (₹) |
| Net Profit as per P&L | 1,00,00,000 |
| Additions: | |
| – Income Tax Provision | 15,00,000 |
| – Dividends Paid | 5,00,000 |
| – Depreciation on Revalued Assets | 2,00,000 |
| Deductions: | |
| – Exempt LTCG | (10,00,000) |
| Book Profit for MAT | 1,12,00,000 |
| MAT @15% | 16,80,000 |
4. Compliance & Reporting
- Tax Audit (Section 44AB): Mandatory if book profits trigger MAT.
- Disclosures in ITR:
- Form 29B(CA-certified MAT computation).
- Schedule MATin ITR-6.
- Maintain Records: Companies must preserve P&L and adjustment details for 7 years.
