These companies would also not be able to carry forward the accumulated additional depreciation of past years in case of shifting to the lower tax regime.
Tax experts said that companies would have to see which regimes suits them depending on their MAT credits, additional accumulated depreciation of past years and future profitability.
"The companies would need to do their maths and see what suits them," said Rahul Garg, Senior Partner (Tax & Regulatory), PwC India.
In a clarification on Wednesday, the Central Board of Direct Taxes (CBDT) said that the tax credit of MAT paid by the domestic company, exercising the option under section 115BAA of the Act shall not be available consequent to exercising of such option.
"Further, as there is no time line within which option under section 115BAA can be exercised, it may be noted that a domestic company having credit of MAT may, if it so desires, exercise the option after utilising the said credit against the regular tax payable under the taxation regime existing prior to promulgation of the Ordinance," the apex decision-making body on direct taxes said.
The government had last month promulgated an ordinance to slash corporate tax to 22 per cent from 30 per cent with the rider that companies will be able to opt for lower tax regime only, if they do not avail any exemptions and incentives.
The CBDT circular has also clarified that a domestic company which exercises option for availing benefit of lower tax rate under section 115BBA shall not be allowed to claim set off of any brought forward loss on account of additional depreciation for an assessment year for which the option has been exercised and for any subsequent assessment year.
"The circular from the Ministry (CBDT) reflects the much desired responsiveness to provide tax certainty and mitigate tax litigation. The denial of set off of loss from unabsorbed accelerated depreciation affirms the clear intent of the policy makers on the working ofthe new tax schemes," said Gokul Chaudhri, Partner, Deloitte India.
( With inputs from IANS )