MAT

What is Minimum Alternative Tax..? Whether it is applicable to 100% Export Oriented units (EOU)...? Please explain me in brief.... 

Replies (1)

MAT stands for Minimum Alternate Tax u/s. 115JB

 

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 who were not contributing to the Govt by way of corporate tax, 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.

 

The Govt.has made some tax concessions for certain categories of investment. Some companies take advantage of the same n earn profit. Because of tax concessions, they do not pay income tax. These companies, which make profits but do not pay tax due to Govt.. policy, were earlier paying a lower rate of tax (10 % ). The same was called minimum alternate tax.This MAT has been enhanced from 10 % to 15 %.

 
This is calculated on Book Profits before Tax (PBT)

 

100% EOUs are liable to pay MAT.

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