MAT

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Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2011 Dear Experts

Can anyone explain the concept or applicability of MAT.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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07 February 2011 When MAT on book profits as computed u/s 115JB is more than tax on income as per income tax you have to pay MAT on the book profit.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 February 2011 In India a comapny is liable to pay income tax on the income computed in accordance with the provisions of the Income tax Act,1961, whereas the profit and loss account of the company is prepared as per provisions of the Companies Act,1956. There were large number of companies who had book profits as per their profit and loss account but were not paying any income tax because income computed as per provisions of the income tax act,1961 was either nil or negative or insignificant by virtue of availing certain deduction / exemption available to them as per the Income tax Act,1961. In such cases, although the companies were showing book profits and declaring dividends to the shareholders, they were not paying any income tax. These companies are popularly known as Zero Tax companies. Inorder to bring such companies under the income tax
act net,The Finace Act 2005, introduced from FY 2006-07, Section 115JB that provides if the tax payable on the total income as computed under the Income-tax Act,1961 in respect of any previous year relevant to the assessment year commencing on or after April 1 2001, is less than 7.5% of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be 7.5% of such book profit.
Budget 2010-11 MAT u/s 115JB has been increased to 18%.

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