Positive adjustments by way of addition to net profit for determining book profit:

1.    income-tax paid or payable, and the provision for tax

2.    amount transferred to reserve other than a reserve specified under section 33AC;

3.    provisions made for meeting liabilities, other than ascertained liabilities;

4.    provision for losses of subsidiary companies

5.    amounts of expenditure relatable to any income to which is exempt u/s 11, 12, 10 except 10(38)

6.    amounts of expenditure relatable to income, being share  in the income of an AOP or BOI, on which no income-tax is payable in accordance with the provisions of section 86;

7.    expenditure relatable to income accruing or arising to an assessee, being a foreign company, from,— (A)   the capital gains arising on transactions in securities; or (B)   the interest, dividend, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII,

8.    notional loss on transfer of a capital asset, being share of a special purpose vehicle, to a business trust in exchange of units allotted by the trust;

9.    expenditure relatable to income by way of royalty in respect of patent chargeable to tax under section 115BBF;

10.             depreciation,

11.             deferred tax and the provision therefor

12.             amounts set aside as provision for diminution in the value of any asset

13.             amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset

14. amount of gain on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through statement of profit and loss, as the case may be;]

Negative adjustment by way of reducing from net profit:

1.      amount withdrawn from any reserve or provision if any such amount is credited to the statement of profit and loss,

2.      exempt income u/s 11, 12, 10 except 10(38)

3.      depreciation debited to the statement of profit and loss (excluding the depreciation on account of revaluation of assets);

4.      withdrawn from revaluation reserve and credited to the statement of profit and loss, to the extent it does not exceed the amount of depreciation on account of revaluation of assets

5.      income, being the share  in the income of an AOP or BOI, on which no income-tax is payable in accordance with the provisions of section 86, if any, such amount is credited to the statement of profit and loss;

6.      capital gains arising on transactions in securities; or the interest, dividend, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII,  if such income is credited to the statement of profit and loss

7.      notional gain on transfer of a capital asset, being share of a special purpose vehicle to a business trust , or  notional gain resulting from any change in carrying amount of said units, or

8.       gain on transfer of units referred to in clause (xvii) of section 47,  if any, credited to the  statement of profit and loss;

9.      royalty in respect of patent chargeable to tax under section 115BBF,

10.  aggregate amount of unabsorbed depreciation and loss brought forward

11.  amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account ,

12.  profits of sick industrial company for the assessment year during which remain sick’

13.  Amount of deferred tax, if any such amount is credited to the statement of profit and loss.

Upto AY 2019-20: If tax computed as per normal provisions is less than 18.5% of the book profit, then notwithstanding anything contained in any other provision of this Act, book profit shall be deemed  total income of the assessee and the tax payable  on such total income shall be the amount of income-tax @ 18.5%.

From AY 2020-21: tax rate reduced to 15%.  As per 1^st proviso to section 115JB(1) inserted by the Taxation Laws (Amendment) Act, 2019, w. e. f. 1-4-2020.

Note: unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange tax @ 9%.

Company shall prepare its [statement of profit and loss] for the relevant previous year in accordance with the provisions of Schedule III to the Companies Act, 2013, and if schedule –III not applicable, in accordance with the provisions of the Act governing such company.

While preparing the annual accounts including statement of profit and loss,—

(i)   the accounting policies;

(ii)   the accounting standards adopted for preparing such accounts including statement of profit and loss;

(iii)   the method and rates adopted for calculating the depreciation,

shall be the same as have been adopted for the purpose of preparing such accounts including statement of profit and loss] and laid before the company at its annual general meeting.

Note : MAT applicable to SEZ unit or developer as well.

Note: report from CA in  Form  No. 29B( rule 40B)

Note: Nothing contained in sub-section 115JB (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) of section 74A.

 As per section 115JB (5A) provisions of this section shall not apply to,—

(i)   any income accruing or arising to a company from life insurance business referred to in section 115B;

(ii)   a person who has exercised the option referred to under section 115BAA or section 115BAB.

Section 115BAB is optional for new manufacturing unit  where tax rate is 15% .

Note: no interest shall be payable on the tax credit allowed under sub-section (1A) for MAT paid.

 Max time limit to C/F is next  5 AY.s

Set off in the year in which liabilities of tax under normal provision to be discharged.

If lower tax rate option exercised  benefit of set off of excess tax credit paid in preceding years not allowed.