New Delhi, Jan 6 (PTI) The Income Tax Department today relaxed norms for levy of Minimum Alternate Tax (MAT) on companies facing corporate insolvency proceedings.

As per Section 115JB of the Income Tax Act, MAT is levied on book profit after deducting the amount of loss brought forward or unabsorbed depreciation, whichever is less.

"With effect from assessment year 2018-19 (FY2017-18), in case of a company, against whom an application for corporate insolvency resolution process has been admitted by the adjudicating authority under...the IBC, the amount of total loss brought forward (including unabsorbed depreciation) shall be allowed to be reduced from the book profit for the purposes of levy of MAT under section 115JB of the Act," it said.

This has been done to minimise the genuine hardships faced by such companies, said the Central Board of Direct Taxes (CBDT).

Lenders of those companies, which have defaulted on loans, have been approaching the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code.

Minimum Alternate Tax: companies under admitted insolvency proceedings may deduct accumulated losses and unabsorbed depreciation from book profit. The Central Board of Direct Taxes permits a full reduction of accumulated losses and unabsorbed depreciation from book profit for the purposes of Minimum Alternate Tax where a company has had an application for corporate insolvency resolution process admitted by the adjudicating authority; the allowance applies from the assessment year noted by the Board and alters the MAT computation by permitting total loss brought forward, including unabsorbed depreciation, to be deducted from book profit for eligible companies.