A query

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%.