On 10 August 2021, the Central Board of Direct Taxes (CBDT) has published Notification No. 92/2021, which contains a new rule for calculating tax relief in the event of an increase in book profit as a result of adjustments to Advance Pricing Agreements (APA) or secondary Adjustments.
The CBDT notice contains a formula to reduce the amount of tax payable. The notice was prepared in accordance with the amendment in Section 115JB of the Income Tax Act 1961 (Act) by the Finance Act 2021. The change allowed recalculating the book profits according to the minimum alternative tax (MAT) for the relevant year, which was due to the additional income of the previous year (s) after the conclusion of the APA or due to other secondary adjustments. In this way, the book profits are to be adjusted each year according to MAT to the taxable income after the transfer pricing adjustment.
