Mat Applicability On Llp

Similar to company llp paying amt can claim its credit for 10 assessment years.

Mat applicability on llp.

Non applicability of mat in respect of certain foreign companies section 115jb effective retrospectively from. Vide finance act 2011 the provisions of amt were made applicable to the llp. The concept to amt is similar to the minimum alternate tax mat as applicable to the companies but since there is no concept of book profits in case of llp the llp s will be liable to pay amt on their adjusted total income equivalent to adjusted taxable income. When an llp has claimed deduction under section 10aa.

18 50 000 higher of the two mat credit. Mat is applicable for all companies except for companies involved in the life insurance business. Mat is applicable to foreign companies also. Mat a brief introduction.

If an llp has claimed deduction under section 35ad. Applicability of mat 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 education cess ec secondary and higher education cess. As per section 115jaa if in any year a company pays its tax liability as per mat then it can claim mat credit being the excess mat paid over the normal tax liability. Tax liability as per mat.

The provision of mat is given under section 115jb under chapter xii b of the income tax act whereas the provision of amt is given under section 115jc under chapter xii ba of the income tax act. It may be noted that mat applies only to companies and llps. Difference between mat minimum alternate tax and amt alternate minimum tax mat is applicable on companies whereas amt is applicable to llps and non corporate assessee. The taxation laws amendment bill 2019 proposed to insert a proviso to section 115jb 1 of the act that the rate shall be reduced from 18 5 to 15 from previous year commencing on or after april 1 2020.

It means as per the bill the reduced rate of 15 per cent for mat is applicable from ay 2021 22. A y 2001 02 i section 115jb 1 provides for levy of minimum alternate tax mat in case of a company if the tax payable on the total income as computed under the income tax act 1961 is less than 18 5 of its book profit. Provisions of amt are applicable only in the following cases when an llp has claimed deduction under section 80h to 80rrb except section 80p. 18 50 000 thus the tax paid by the company would be rs.

1 60 000 being excess of mat over normal tax liability of rs. 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. In this case as the liability of mat is higher and hence the company will be entitled to claim mat credit of rs.