Mat Tax India

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.

Mat tax india.

India amt on companies termed as mat minimum alternate tax applicable 18 5 on adjusted book profit i e income computed under the provisions of the companies act with specified adjustments if the regular tax liability under income tax provisions is less than this amount amt credit available against. Mat is a tax provision designed to bring zero tax paying companies into the income tax net. Effective tax rates include surcharge and health and education cess. The key reason for introduction of mat is to ensure minimum levels of taxation for all domestic and foreign companies in india.

For example the book profit of a company before depreciation is rs7lakh. If during a year a company has paid tax liability as per mat it is entitled to claim credit of excess of mat paid over the normal tax liability in the following year s. Basic rate of mat is 9 of book profits in case of a corporate and non corporate taxpayer located in an international financial services centre and deriving income solely in convertible foreign exchange. Mat or minimum alternate tax is a provision in direct tax laws to limit tax exemptions availed by companies so that they pay at least a minimum amount of corporate tax to the government.

The tax liability of a company will be higher of. Taking advantage of various provisions of the income tax act such as exemptions deductions. Surcharge of 10 is payable only where total taxable income exceeds inr 10 million. Tax 30 on rs.

After considering depreciation and other. The common features of mat are as under. Mat stands for minimum alternate tax described as a direct tax that has to be paid by the companies that are enjoying tax benefits or tax exemptions instead of having huge profits under various schemes framed under income tax act. Minimum alternate tax or mat is only applicable to companies and not to individuals hufs partnership firms etc.

28 40 000 will amount to rs. Rules pertaining to section 115ja are applicable to foreign companies that generate profits through their operations in india. Normal tax rate applicable to an indian company is 30 plus cess and surcharge as applicable. Book profit of the company is rs.

Features of the mat regime.