Section 115J - Special provisions relating to certain companies

Companies paying less than 30% tax on book profits face minimum alternate tax under Section 115J

Section 115J of the Income Tax Act, 1961 establishes minimum alternate tax provisions for companies. When a company's computed total income falls below thirty percent of its book profit for assessment years 1988-1991, the taxable income is deemed to be thirty percent of book profit. Book profit is defined as net profit from profit and loss accounts prepared under Companies Act provisions, adjusted by adding back income tax, reserves, provisions, subsidiary losses, dividends, and exempt income expenditure, while reducing withdrawals from reserves and exempt income credits. The provision excludes electricity generation and distribution companies and preserves carry-forward benefits for subsequent years.