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Clarification on Y2K tax sops

A finance ministry official has explained that all expenditure on software and hardware incurred for Y2K compliance after April 1, 1999, would be treated as revenue expenditure for fiscal 1999-2000.

However, companies claiming this concession would have to get the expenditure certified from a chartered accountant, he said.

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That is, the equipment and software replaced must be certified as being Y2K non-compliant for the company to treat the expenditure wholly as revenue expenditure.

Also, the expenditure incurred on Y2K compliance before April 1, 1999, would not be treated wholly as revenue expenditure and would be subject to existing laws.

This clarification was given by a revenue officer at a KPMG presentation on the Budget in New Delhi.

Another point that emerged during the discussion was that the income earned by a company from mutual funds would be exempt from the 'minimum alternative tax'. For the purpose of calculation of MAT on an otherwise zero-tax company, the income from mutual funds would not be taken into account, said Ganesh Raj, senior manager, Bharat S Raut and Company.

- Compiled from the Indian media

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