Hello everyone...
Can someone please explain me the concept of MAT (Minimum Alternate Tax) in Short ...
Thanks alot in advance...!
1 Replies
CA Manish
(Job)
(5264 Points)
Replied 01 October 2012
Minimum Alternate Tax (MAT)
(Chapter-XIIB {Section 115J/ JAA/ JB})
Objective behind the introduction of MAT:
Normally, a coma pny is liable to pay tax on the income computed in
accordance with the provisions of the income tax Act, but the profit and
loss account of the company is prepared as per provisions of the
Companies Act. There was large number of companies who had book
profits as per their profit and loss account but were not paying any ta x
because income computed as per provisions of the income ta x act was
either nil or negative or insignificant. I n such case, although the
companies were showing book profi ts and declaring dividends to the
shareholders, they were not paying a ny income tax. These companies are
popularly known as Zero Tax companies. In order to bring such companies
under the income tax act net, MAT wa s introduced.
Section 115JB was i ntroduced in Finance Act, 2000 w.e .f. 1.4.2001,
whereby, a compa ny s hall be liable to pay higher of ta x computed under
I ncome Tax Ac t provisions and tax computed under Sec 115JB .
MINIMUM ALTERNATE TAX ( MAT )
Applicability:
The provisions of this chapter are applicable only to C ompanies and not
to any other assess ee like I ndividual, HUF, Partnership Firm, etc.
Statutory Provision of Section 115JB as mentioned under Income Tax
Act,1961
115JB. (1) Notwithstanding anything contained in any other provision of this
Act, where in the case of an assessee, being a company, the income-tax,
payable on the total income as computed under this Ac t in respect of
any previous year relevant to the assessment year commencing on or
after the 1st day of April, 2012, is less than 18.5% of its book
profit, such book profit shall be deemed to be the total income of the
assessee and the tax payable by the assessee on such total income shall
be the amount of income-tax at the rate of 18.5%.
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