Minimum Alternate Tax

Minimum Alternate Tax

1. Sushmitha H S 2 nd M.com Under the guidance of Sundar B. N. Asst. Prof. & Course Co-ordinator GFGCW, PG Studies in Commerce Holenarasipura

2. What is Minimum Alternate Tax or MAT? Under the provisions of the Minimum Alternate Tax Act, as per section 115JB, every company domestic or foreign is required to pay MAT. MAT is a tax levied under Income Tax Act of India, 1961.

3. MAT Credit MAT Report Applicability of MAT in SEZs 2 1 3 4 Advance Payment of Tax

4. MAT Credit It is entitled to claim credit of excess of MAT paid over the normal tax liability in the following years. One can find provisions relating to carry forward and adjustment of MAT credit in section 115AA. MAT credit is not utilized by the company with 15 years, Then it will lapse.

5. MAT Report Every company that is liable to pay MAT is required to furnish a MAT report as prescribed in form 29B [as per rule 40B of the IT rules].

6. Advance Payment Of Tax Under Income Tax Act 1961, every assesses has to pay tax in advance in case the advance tax liability is Rs. 10,000 or more during a financial year. All companies are required to pay advance tax under section 115JB of the Income Tax Act.

7. Applicability Of MAT In Special Economic Zones [SEZs] MAT directives did not apply to income generated by companies via operations in SEZs. This was, however amended by the finance Act, 2011, and a provision was added, which made section 115JB applicable to all companies.

8. MAT was introduced by the Finance Act, 1987 with effect from assessment year 1988-89. Later on it was withdrawn by the Finance Act, 1990 and then reintroduced by Finance [no. 2] Act, 1996. To collect taxes from all the zero tax companies. OBJECTIVES

9. PROVISIONS OF MAT Tax liability of the company computed as per the normal provisions of the Income-tax Law. Tax computed in above manner can be termed as normal tax liability. Tax computed @ 15% [plus surcharge and cess as applicable] on book profit .

10. Meaning Of Book Profit Net profit as shown in the statement of profit and loss prepared in avoidance with schedule 3 to the companies Act, 2013 as increased and decreased by certain items prescribed in this regard.

11. Conclusion Tax is the most important element as it is the revenue for the government on which the government operates. Introduction of MAT is the best step taken by the government as it will keep an eye on the zero tax companies as well as helps in reducing the tax evasion in our country.

12. REFERENCE https ://www.bankbazar.com/tax/minimum-alternate-tax.html https://www.finananbooks.com/blog/mat-minimum-alternate-tax-how-calculate . https://cleartax,in/s/tax-planning-under-mat