Where any amount of tax is paid under section 115JB(1) by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. [Section 115JAA(1A)].
1. Amount of Tax Credit.
The amount of credit to be given shall be the difference between tax paid for any assessment year u/s 1I5JA (1) or u/s 1I5JB (as the case may be) and the amount of tax payable by the assessee on its total income.
In other words :
Amount of tax credit = MAT — Tax payable on total income computed as per normal provisions of Income Tax Act.
2. Year in which tax credit shall be available [Section 115JAA(4)]
Tax credit shall be allowed to set-off in a year when tax becomes payable on the total income computed in accordance with the normal provisions of the Income Tax Act, 1961. In other words, tax credit is available in the previous year in which tax as per normal provisions of Income Tax Act is more than the tax payable under MAT. Tax credit cannot be set-off against minimum alternate tax payable under section 115JB.
3. Period for which tax Credit is available [Section 115JAA(3A)].
With effect from Assessment Year 2007-08, the amount of tax credit shall be carried forward and set-off upto Seventh Assessment Year immediately succeeding the assessment year in which tax credit become allowable under section I 15JAA(1A).
However upto Assessment year 2006-07, such carry forward and set-off was allowed upto 5th assessment year immediately succeeding the assessment year in which tax credit became allowable.
Note. No interest shall be payable on the tax credit allowed under sub-section (1A) of section 115JAA.
4. Increase/Decrease of Tax Credit
Where as a result of an order under sub-section (1) or sub-section (3) of section 143, section 144, section 147, section 154, section 155, sub-section (4) of Section 245D, section 250, section 254, section 260, section 262, section 263 or section 264, the amount of tax payable under this Act is reduced or increased, as the case may be, the amount of tax credit allowed under this section shall aslo be increased or reduced accordingly.