Mat Calculation In Income Tax

The amount of tax and surcharge cannot exceed the tax calculate under marginal relief.

Mat calculation in income tax. However the rate of income tax under section 115jb shall be reduced rate of 15 percent instead of 18 5 per cent with effect from assessment year commencing on or after the 1st day of april 2020. Step 2 adjustment to net profit to convert it into book profit which are given under explanation 1 to section 115jb. As per section 115jb every taxpayer being a company is liable to pay mat if the income tax including surcharge and cess payable on the total income computed as per the provisions of the income tax act in respect of any year is less than 18 50 of its book profit surcharge sc health education cess. It is calculated under section 115jb of the income tax act.

Tax liability as per the normal provisions of income tax act tax rate 30 plus 4 edu cess plus surcharge if applicable. Payable tax cannot be less than the 18 5 of book profit in an assessment year the mat rate has been reduced to 15 from fy 19 20. Since income exceeds 1 crore marginal relief is to be calculated i e. Assessing officer s power to alter net profit.

Mat is calculated under section 115jb of the income tax act. There are specific provisions under the income tax act 1961 under which the mat is collected from every company. Now compute tax payable as per mat provisions tax payable 18 5 surcharge 7 19 795 of 1 01 00 000 19 99 295. It means the rate of mat is reduced to 15 percent from the ay 2020 21 itself.