India Mat Tax

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 under mat such companies are made liable to pay to the government by deeming a certain percentage of their book.

India mat tax.

In india mat is levied under section 115jb of the income tax act 1961. Book profit of the company is rs. However mat provisions shall not apply to foreign companies where their total income is solely derived from shipping business exploration of mineral oils business of aircraft civil construction in turnkey projects and income thereon is offered to tax as. The absence of any changes in the provisions of section 115jaa income tax act which deal with the carry forward and set off of mat credit supports the argument that the brought forward mat credit should be available even for a company which opts for the lower tax regime said gautam mehra leader tax and regulatory services at pwc india.

I normal tax liability or ii mat. Minimum alternative tax is payable under the income tax act. The key reason for introduction of mat is to ensure minimum levels of taxation for all domestic and foreign companies in india. This allows a company to carry forward the excess tax it pays because of mat as against its regular tax liability in a particular year to be utilised in a future year as a credit against its.

28 40 000 will amount to rs. The tax liability of a company will be higher of. Mat provisions are not applicable to foreign companies that do not have a pe in india. Tax 30 on rs.

Mat is a tax provision reintroduced in 1997 in an attempt to bring zero tax high profits companies into the income tax net. This allows a company to carry forward the excess tax it pays because of mat as against its regular tax liability in a particular year to be utilised in a. Mat a brief introduction. 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.

It is calculated on the basis of the book profits of a company not its. It was introduced in the year 1987 and. In india when applied to companies amt is termed the minimum alternate tax mat operating with a mat credit carry forward mechanism. In india when applied to companies amt is termed the minimum alternate tax mat operating with a mat credit carry forward mechanism.