Understand Form 29B of Income Tax

Form 29B may sound like just another compliance requirement under the Income Tax Act, but for companies subject to Minimum Alternate Tax (MAT), it plays a crucial role. Far from being a routine form, it ensures transparency in how corporate profits are taxed and helps businesses stay on the right side of the law.

This guide explains what Form 29B is, why it matters, who needs to file it, and how to do so smoothly, so you can approach tax season with confidence instead of confusion.

What Is Form 29B?

Form 29B is a Chartered Accountant–certified report prescribed under Section 115JB of the Income Tax Act, 1961. It certifies a company’s book profits for the purpose of calculating Minimum Alternate Tax (MAT).

In simple terms, MAT ensures that companies pay a minimum level of tax even if deductions, exemptions, or incentives reduce their normal taxable income to very low levels. Currently, MAT is levied at 15% of book profits, plus applicable surcharge and cess.

Think of it this way:
Your company’s financial statements show strong profits, but after claiming deductions, your taxable income looks minimal. MAT steps in to ensure a fair contribution to the tax system. Form 29B confirms that these book profits have been accurately calculated and verified by a Chartered Accountant.

Important to note:

• Form 29B applies only to companies—not individuals, LLPs, or partnership firms.
• Both domestic and foreign companies operating in India may be required to file it.
• The provision was introduced to curb situations where profitable companies paid little or no tax.

What is the Purpose of Form 29B?

The purpose of Form 29B is to promote fairness and transparency in corporate taxation. Without MAT and its certification, companies could significantly reduce their tax liability through incentives, impacting government revenue.

Key benefits and importance include:

• Ensures MAT compliance and avoids disputes during assessments
• Supports MAT credit claims, which can be carried forward for up to 15 assessment years and adjusted when normal tax exceeds MAT
• Prevents penalties and scrutiny from the Income Tax Department
• Offers clarity and protection during audits, especially for companies with complex deductions

Real-world example:
A technology company reports a book profit of ₹10 crore but reduces its taxable income to ₹1 crore through R&D deductions. MAT applies on the higher book profit, and Form 29B acts as official certification, ensuring compliance and reducing litigation risk.

Who Is Required to File Form 29B?

Form 29B must be filed by companies liable to MAT under Section 115JB, including:

• Domestic and foreign companies operating in India
• Companies whose normal income tax liability is lower than 15% of book profits
• Businesses claiming significant deductions or exemptions

Key Triggers for Filing:

• Book profits (as per Section 115JB) exceed normal taxable income
• MAT is applicable after adjustments to the profit and loss account

When Form 29B Is Not Required:

• Companies with zero or negative book profits
• Companies where normal tax liability exceeds MAT
• Certain exempt entities, such as shipping companies under the tonnage tax scheme (Sections 115V-O to 115V-ZC)

Practical tip:
If your company has high turnover and relies heavily on tax incentives or exemptions, it’s wise to assess MAT exposure early with your CA.

Filing Form 29B: Procedure and Compliance

Filing Form 29B is mandatory for MAT-applicable companies and must be completed electronically through the Income Tax e-filing portal. The form must be submitted on or before the due date of filing the Income Tax Return, or at least one month prior, as applicable.

Prerequisites:

• A Chartered Accountant registered on the e-filing portal
• A valid Digital Signature Certificate (DSC) for the CA
• Audited financial statements
• Book profit computation and adjustment details under Section 115JB
• An active e-filing account for the company

Step-by-Step Filing Process:

1. Log in to the Income Tax e-filing portal at incometax.gov.in using the company’s PAN and password.
2. Navigate to e-File > Income Tax Forms > File Income Tax Forms, and select Form 29B.
3. Assign the form to your CA using the “My CA” service.
4. The CA completes:
   • Part A – General company details
   • Part B/C – Computation of book profits
   • Certification with membership number and digital signature
5. Once uploaded, the company reviews the form under Pending Actions, accepts it, and completes e-verification using DSC or EVC.
6. Upon successful submission, note the Transaction ID for future reference.

Note: Manual filing is not permitted.

Final Thoughts

Form 29B is more than a compliance checkbox—it is a safeguard that ensures accurate tax reporting, enables MAT credit benefits, and protects companies from future tax complications. With proper planning and timely certification by a Chartered Accountant, MAT compliance can be managed efficiently and stress-free.

If your company may fall under MAT provisions, addressing Form 29B proactively is not just good practice—it’s smart financial governance.

Frequently Asked Questions (FAQs) on Form 29B and MAT

Q.1 What is the full form of MAT?

The full form of MAT is Minimum Alternate Tax. 

Q.2 What is MAT?

Minimum Alternate Tax (MAT) is a provision under Section 115JB of the Income Tax Act, 1961. It requires companies to pay tax at a prescribed rate (currently 15% plus applicable surcharge and cess) on their book profits when the tax payable under normal income tax provisions is lower than MAT.

In simple terms, MAT prevents profitable companies from paying zero or very low tax due to excessive tax benefits.

Q.3  Is Form 29B mandatory for all companies?

No, Form 29B is not mandatory for all companies. It is required only for companies that are liable to pay MAT under Section 115JB.

If a company’s normal income tax liability is less than 15% of its book profits, Form 29B must be filed along with certification from a Chartered Accountant. Companies with no MAT liability are not required to file this form.

Q.4 Is MAT applicable to all companies?

No, MAT is not applicable to all companies. It applies only to:

• Companies whose tax payable under normal provisions is lower than MAT
• Domestic and foreign companies operating in India with positive book profits
• MAT is not applicable in cases such as:
• Companies with zero or negative book profits
• Companies where normal tax liability exceeds MAT
• Certain exempt entities, such as shipping companies under the tonnage tax scheme

Q.5 Who certifies Form 29B?

Form 29B must be certified by a practicing Chartered Accountant (CA). The CA verifies and certifies the computation of book profits as per Section 115JB before the form is submitted electronically on the Income Tax portal.

Q.6 Can MAT paid be adjusted in future years?

Yes. MAT paid can be claimed as MAT credit and carried forward for up to 15 assessment years. This credit can be adjusted in future years when the normal income tax payable exceeds MAT.

Q.7 What happens if Form 29B is not filed on time?

Failure to file Form 29B when required may result in:

• Disallowance of MAT computation
• Penalties and interest
• Increased scrutiny from the Income Tax Department

Timely filing helps avoid compliance issues and unnecessary litigation.