Form 29B: Report from a Practicing Chartered Accountant certifying Book Profits

Income Tax

Introduction

An assessee who is liable to pay Minimum Alternate Tax is required to furnish report from a practicing Chartered Accountant in Form 29B certifying that the book profit has been computed in accordance with the provisions of the section 115JB.

Minimum Alternate Tax

Minimum Alternate Tax (MAT) is applicable to all companies including foreign companies in India and is being computed under section 115JB. MAT is a fixed percentage of the book profits of the company.

MAT is payable by a company if the income tax (including surcharge and cess) payable on taxable income is less than 15% of its book profit plus surcharge and cess (9% in case of company being a unit of IFSC & income is in convertible foreign exchange).

Exceptions to MAT: MAT is not applicable to any income received by a company from life insurance business and shipping income liable to tonnage taxation. The tonnage taxation system in covered under Sections 115V to 115VZC of the Income Tax Act, 1961.

Form 29B

Form 29B is a report under Section 115JB for computing the book profits of the Company. The same is to be furnished by a CA for a Company to which Section 11JB applies. This helps the assessee ensure correct computation of book profits to avail the resultant MAT credit arising out of the tax computed in accordance with the Income Tax Act.

Who is required to furnish Form 29B

Every Company where the income is less than 15% of the book profit is required to obtain a report from a Chartered Accountant in Form 29B. This report should be obtained and submitted one month before the due date for filing of return u/s 139(1) or along with the return of income furnished in response to a notice under Section 142(1)(i).

Due Date for filing Form 29B

Form 29B is to be furnished at least one month prior to filing of Return of Income. Thus, following two deadlines can be considered as last date:

  1. 31st October: For assessee entered into International Transaction or Specified Domestic Transactions under section 92E and due date to furnish Return of Income is 30th
  2. 30th September: For assessee not having International Transaction or Specified Domestic Transactions under section 92E and due date to furnish Return of Income is 31st

Mode of filing Form 29B

Form 29B is to be filed online on Income Tax Portal.

Penalty for Late Filing of Form 29B

According to section 271B of the Income Tax Act, the penalty for late filing of Form 29B is Rs. 1,50,000 or 0.5% of the total sales, turnover or gross receipts of the business, whichever is lower.

Additionally, if the taxpayer is required to get their accounts audited under section 44AB and fails to do so, they may be subject to a penalty of 0.5% of the total sales, turnover or gross receipts of the business, subject to a maximum of Rs. 1,50,000.

Consequences of Late Filing of Form 29B

  1. Interest on Tax Liability:If the taxpayer fails to file Form 29B within the due date, they may be subject to interest on the tax liability. The interest rate is 1% per month or part of a month on the tax amount due.
  2. Disallowance of Expenses: If the taxpayer fails to file Form 29B within the due date, the expenses claimed in the tax return may be disallowed by the Income Tax Department.
  3. Prosecution: In some cases, the Income Tax Department may initiate prosecution proceedings against the taxpayer for non-compliance.

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