What Is Mat In India

Introduced by the finance act 1987 mat came into effect from assessment year 1988 89.

What is mat in india.

Rules pertaining to section 115ja are applicable to foreign companies that generate profits through their operations in india. It was introduced in the year 1987 and implement the following year. The key reason for introduction of mat is to ensure minimum levels of taxation for all domestic and foreign companies in india. The present mat rate as of fy 2019 20 is 15 of book profit previously 18 5 plus applicable cess and surcharge.

Under the provisions of section 115jb where the income tax calculated under the income tax act is less than 18 5 of the book profit then such book profit shall be deemed to the total income of the assessee and tax payable. The mat is conducted 4 times a year in the months of february may september and december. How is mat calculated. Minimum alternate tax or mat is only applicable to companies and not to individuals hufs partnership firms etc.

In india mat is levied under section 115jb of the income tax act 1961. 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. Features of the mat regime. The common features of mat are as under.

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