What Is Mat Tax Definition

Mat is a tax levied under section 115jb of the income tax act 1961.

What is mat tax definition.

The computation of mat on companies under the income tax act 1961 act is a complex provision as it makes certain specific mandated adjustments 1 the provisions relating to mat on companies and alternate minimum tax on llps are covered under chapters xii b and xii ba of the income tax act 1961 act. Later it was withdrawn by the finance act 1990 but reintroduced again from 1 april 1997. Normal tax rate applicable to an indian company is 30 plus cess and surcharge as applicable. It was first introduced by the finance act 1987 and made effective from ay 1988 89.

Tax preference item definition. 8 40 000 will amount to rs. Tax preference item is a type of income normally tax free that may trigger the alternative minimum tax amt for taxpayers. A value added tax vat is a consumption tax placed on a product whenever value is added at each stage of the supply chain from production to the point of sale.

I normal tax liability or ii mat. Mat a brief introduction. Book profit of the company is rs. Tax 30 on rs.

Minimum alternative tax is payable under the income tax act. The minimum alternate tax mat on. But here only mat on company s u s 115jb is discussed. 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 by the assessee shall be 18 5 on book profits.

As per the concept of mat the tax liability of a company will be higher of the following two. The tax liability of a company will be higher of. 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.