CHENNAI: State-run oil explorer Oil and Natural Gas Corporation (ONGC) has stuck to paying taxes under the old corporate tax regime due to a “substantial” amount of unutilised MAT tax credit available.
A switch to the new tax regime, which offers a corporate income tax rate of 22 per cent, would require the company to give up this accumulated tax credit since they cannot be carried over into the new tax regime.
The company’s standalone results for the financial year 2020-21 declared a profit before tax of Rs 16,402.79 crore and total tax expenses of Rs 5,156.3 crore (31.43 per cent).
During the last year, profit before tax stood at Rs 20,387.82 crore and total tax expenses at Rs 6,924.15 crore (33.96 per cent) But, “there is a substantial amount of unutilized MAT credit available, which can be used under existing tax regime, but not under new tax regime,” ONGC said in response to a query on its tax expenses.
Indian tax laws require companies to pay a Minimum Alternate Tax (MAT)—set at 15% from FY20.
The difference between MAT paid by the company and the actual incidence of tax according to general income tax provisions is considered MAT credit (when MAT paid is higher than the latter).
Companies can set off accumulated MAT credit against future tax expenses for a 15 year period.
While ONGC did not reveal MAT credit available currently, its latest annual report (for FY20) puts MAT credit entitlement at Rs 1,787.9 crore as of the end of March 31, 2020.