Minimam alternate tax

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Chiranjeevi Chintala

Chiranjeevi Chintala (Querist)
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29 October 2013 Dear All,

Can you explain Minimam Alternate Tax (MAT)?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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29 October 2013 The concept of Minimum Alternate Tax (MAT) was introduced in the direct tax system to make sure that companies having large profits and declaring substantial dividends to shareholders but not paying tax to the Govt by taking advantage of the various incentives and exemptions provided in the Income-tax Act, pay a fixed percentage of book profit as minimum alternate tax. Normally, a company is liable to pay tax on the income computed in accordance with the provisions of the income tax Act, but the profit and loss account of the company is prepared as per provisions of the Companies Act. There were large number of companies who had book profits as per their profit and loss account but were not paying any tax because income computed as per provisions of the income tax act was either nil or negative or insignificant. In such case, although the companies were showing book profits and declaring dividends to the shareholders, they were not paying any income tax. These companies are popularly known as Zero Tax companies. In order to bring such companies under the income tax act net, section 115JA was introduced w.e.f. assessment year 1997-98.

Present rate of MAT is 18.5%

Chiranjeevi Chintala

Chiranjeevi Chintala (Querist)
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29 October 2013 Thanks for Interdiction Mr. Sanjay G.

Sir, Can you explain with Example in figure?

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