Mat Income Tax Act

As per the concept of mat the tax liability of a company will be higher of the following two.

Mat income tax act. 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 15 of its book profit surcharge sc health education cess. The mat is a local tax that india has levied on companies since 1987 and ensures that companies who are able to reduce their tax liability up to zero percent despite earning substantial book profits due to various provisions under india s income tax act it 1961 are brought under the tax net. The concept of mat was introduced to target those companies that make huge profits and pay the dividend to their shareholders but pay no minimal tax under the normal provisions of the income tax act by taking advantage of the various deductions and exemptions allowed under the act. Minimum alternate tax mat is a tax effectively introduced in india by the finance act of 1987 vide section 115j of the income tax act 1961 it act to facilitate the taxation of zero tax companies i e those companies which show zero or negligible income to avoid tax under mat such companies are made liable to pay to the government by deeming a certain percentage of their book.

Under the provisions of section 115jb where the income tax calculated under the income tax act is less than 18 5 of the book profit then such book profit shall be deemed to the total income of the assessee and tax payable by the assessee shall be 18 5 on book profits. Analysis of provision of section 115jb where in case of a company the income tax payable on the total income as computed under the income tax act in respect of any previous year is less than 15 of its book profit then such book profit shall be deemed to be the total income of the assessee and the tax. With mat companies have to pay up a minimum amount of tax to the government. The minimum alternative tax mat is a provision introduced in direct tax laws to limit the tax deductions exemptions otherwise available to taxpayers so that they pay a minimum amount of tax to the government.

Later it was withdrawn by the finance act 1990 but reintroduced again from 1 april 1997. In india mat is levied under section 115jb of the income tax act 1961. Minimum alternate tax calculation example. Applicability of mat mat is applicable to all companies including the foreign companies.

Minimum alternative tax is payable under the income tax act. It was introduced in the year 1987 and. Mat a brief introduction. Minimum alternative tax mat and its computation of book profit and mat credit under section 115jb of income tax act 1961.

Mat is a tax levied under section 115jb of the income tax act 1961. Mat is calculated as 15 of the book profit of the tax assesse. It was first introduced by the finance act 1987 and made effective from ay 1988 89.