Minimum Alternative Tax (MAT) is a system of tax calculation u/s 115JB which is applicable for Company. The tax calculation is basically done by following the steps/adjustments given in the above section. The tax is calculated as per normal provisions and MAT and then whichever tax is higher is paid. If MAT is paid in a year, then excess tax paid over normal provisions is considered as credit and the MAT credit is carried forward and can be adjusted in future years when the tax as per normal provisions is higher than MAT.
Similarly, Alternate Minimum Tax (AMT) is for assessee other than company whose adjusted total income is over 20 lakhs. This is under section 115JC. The adjustments need to be done as per the section 115JC. It is similar to MAT.
The basic idea of introducing MAT and AMT was to tax loss making assessees. Because in normal provisions, tax is paid on profits. However, the adjustments in MAT and AMT, tend to remove the effect of losses and can lead to tax payable. So tax is collected even from loss making assessees. This is just a brief idea on MAT and AMT.
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