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What is Minimum Alternate Tax (MAT) ?

Tax queries 696 views 3 replies

Hi, all

Can you please explain me about MAT provisiones?

Replies (3)

Dear Rajesh,

MAT seeks to defeat the strategy of tax avoidance followed by  companies by showing the profits in the books prepared under companies act (for the purposes of stakeholder's) & not paying tax as per Income tax act.

Now, a company has to pay tax higher of-

1) Tax computed as per other provisions of income tax (other than MAT or what is called as Normal provisions)

2) 15% of Book profits computed in accordance with provisions of MAT.

Mr.Rajesh

Follow this link it may help you to understand MAT ....

https://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/section115JB.htm

Mr. Rajesh

Minimum Alternate tax (called “MAT”) was imposed on companies due to the increase in the number of zero-taxpaying companies.
Companies pays no or less tax, in spite of earning good book profits

Companies claims that their tax profit (as per provision of income tax Act) is nil or less so they (company) need not have to pay tax.
so to control the tax escaping companies & reduce evasion MAT was introduced.

Under MAT system a company has to pay
(1) income tax on profit computed as per income tax act,1961
OR
(2) @ 15% of book profit (as per accounts) after some simple adjustments mentioned u/s 115JB of the income tax act,1961.
Which ever is HIGHER


CCI Pro

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