{"id":36973,"date":"2021-10-23T11:29:01","date_gmt":"2021-10-23T05:59:01","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=36973"},"modified":"2021-10-23T11:29:03","modified_gmt":"2021-10-23T05:59:03","slug":"form-29b-under-section-115jb-of-it-act-1961","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/","title":{"rendered":"Form 29B under Section 115JB of IT Act, 1961: Explained"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Form 29B allows entities to disclose book profits authenticated by a Charted Accountant for a given assessment year as per the norms mentioned u\/s 115JB of the Income Tax Act, 1961. Eligible taxpayers being a company, can file this form via online and offline mode. The write-up will cast some light on the applicability of Form 29B and unveil its exact purpose. But before we start exploring the core topic, let\u2019s go through some fundamentals first.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/#Concept_of_Zero-Tax_Company_and_Advent_of_Minimum_Alternate_Tax\" >Concept of Zero-Tax Company and Advent of Minimum\nAlternate Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/#Key_Facts_Regarding_the_Form_29B\" >Key Facts Regarding the Form 29B&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/#What_do_you_mean_by_MAT_Credit\" >What do you mean by MAT Credit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/#What_purpose_does_Form29B_serves_in_general\" >What purpose does Form29B&nbsp;serves in general?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/form-29b-under-section-115jb-of-it-act-1961\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Zero-Tax_Company_and_Advent_of_Minimum_Alternate_Tax\"><\/span>Concept of Zero-Tax Company and Advent of Minimum\nAlternate Tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A&nbsp;zero tax company&nbsp;is a business that reflects a book\nprofit &amp; pays dividends to stakeholders but does not address tax\nobligations. This became a problematic scenario for tax authorities in India\nuntil it was modified in the 1990s. In India, two distinct business tax laws\nconflicted with each other. An entity was accountable to pay taxes as per the\nIT Act, but P&amp;L accounts were prepared in the purview of the Companies Act.\nThis meant that various entities reflected book profits in the P&amp;L account,\nbut their income under the IT act was zero or insignificant.&nbsp;<\/p>\n\n\n\n<p>In 1996\/, the MAT, aka Minimum Alternative Tax, was introduced,\nwhich differentiated the two accounting practices. As per MAT, taxes were\nestimated by the standard income with available deductions that fulfil various\nbusiness requirements.&nbsp;<\/p>\n\n\n\n<p>As per Section 115JB, entities will require to pay a MAT of 18.5 per cent. But, this implies the book profits are exposed to the tax slab rate of\u00a018.5%.\u00a0The following example reflects the applicability of MAT in <em><strong>India<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/India\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>.<\/p>\n\n\n\n<p>The book profits of an organization prior to claiming any exemptions under the Income Tax Act are Rs 10 lakhs. In this scenario, the organization is required to pay MAT @ 18 per cent on the given Amount, which comes out to be Rs. 185000\/-The MAT does not apply to entities operating in the life insurance regime.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/section-269st-of-it-act-1961\/\">Section 269ST of IT Act 1961: Explained with Examples <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Facts_Regarding_the_Form_29B\"><\/span>Key Facts Regarding the Form 29B&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The submission of Form 29B report is a legal compulsion for entities\nthat fall under Section 115JB* of the IT Act. The company\u2019s CA is liable to\nfill such a form. The applicant is required to furnish the report digitally.<\/p>\n\n\n\n<p>In view of section 115JB*, every eligible entity is obligated to pay MAT if the <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>Income tax<\/strong><\/a> payable on the overall income, estimated as the norms of the IT Act in respect of any year, is less than 15 per cent of its book profit + Surcharge + Health &amp; Education cess.\u00a0<\/p>\n\n\n\n<p><strong><em>The format of Form 29B is pretty user-friendly and straightaway. It encloses the given information:\u00a0<\/em><\/strong><\/p>\n\n\n\n<ul><li>Name &amp; address of the Entity<\/li><li>Nature of business<\/li><li>Pan card number<\/li><li>Assessment year<\/li><li>Amount of the Book profit<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_do_you_mean_by_MAT_Credit\"><\/span>What do you mean by MAT Credit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every entity that is obligated to pay MAT is mandated to furnish a\nMAT report as specified in Form 29B (as per rule 40B of the Income Tax Norms).\nAccordingly, after successful tax filing, the concerned entity can avail of MAT\ncredit. The MAT paid for a given year can be utilized as \u201ccredit\u201d in the next\nyear.<\/p>\n\n\n\n<p>But, there could be difference in the Amount submitted between the\nTax paid as per MAT &amp; the Tax payable under the normal Tax. The excess MAT\npaid is referred to as MAT credit. Thus, such credit can be carried forward for\nthe next 15 years.&nbsp;<\/p>\n\n\n\n<p><strong><em>let\u2019s dive into an example of the MAT carry forward paradigm.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<p>First-year the MAT paid in excess is two lakh rupees. Year 2- MAT\npaid in excess of One lakh rupees. In the third year, the excess Tax paid is\nfour lakhs rupees. Therefore, at the end of the four fiscal years, this entity\nhas the overall MAT credit amounting to Rs. 7 lakhs.<\/p>\n\n\n\n<p>In the fourth year, the entity pays five lakh rupees as MAT; but,\nthe real Tax to be paid is nine lakh rupees. But, in this case, the entity can\nleverage MAT credit worth Rs. 4 lakhs from the overall credit amount available.\nSo the entity in the fourth year saves a fair amount of new spending.&nbsp;<\/p>\n\n\n\n<p>Now in the subsequent year as well, the MAT amount is lower when\ncontrasted with the actual payable amount. Here too, the entity uses MAT\ncredit\u2019s balance available to the extent of Rs 1.50,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_purpose_does_Form29B_serves_in_general\"><\/span>What purpose does Form29B&nbsp;serves in general?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The entity needs to estimate the accurate tax amount under MAT &amp;\nthe Tax to be payable in view of standard tax provision. Certainly, the entity\nneeds to pay a higher amount in this regard. The entity needs to pay the MAT\namount. Such Amount is estimated on the basis of the book profit cited on Form\n29B. The company\u2019s CA audits this report. But, form 29B becomes a vital report\nfor claiming MAT credit. Therefore, filing form 29B is a legal compulsion as\nper Income Tax Act &amp; is profitable to claim the MAT credit.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every entity that maintains a book profit needs to pay MAT. The book profit sum is revealed in the audited report under Form 29B. But, it presumes to be the company\u2019s income for tax estimation purposes. But, in view of this, MAT is estimated &amp; paid. Form 29B serves as a vital document to claim MAT credit in subsequent years. Furthermore, Form 29B is an absolute necessity for the company.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/it-return-for-the-deceased\/\">IT Return for the Deceased: A Detailed Outlook <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Form 29B allows entities to disclose book profits authenticated by a Charted Accountant for a given assessment year as per the norms mentioned u\/s 115JB of the Income Tax Act, 1961. Eligible taxpayers being a company, can file this form via online and offline mode. The write-up will cast some light on the applicability of [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":36997,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[152],"tags":[2002],"acf":{"service_id":"50"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":11932,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/36973"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=36973"}],"version-history":[{"count":43,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/36973\/revisions"}],"predecessor-version":[{"id":37017,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/36973\/revisions\/37017"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/36997"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=36973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=36973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=36973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}