Minimum Alternate Tax (MAT)

Minimum Alternate Tax UPSC

MAT is Minimum Alternate Tax. The aim of MAT is to bring into tax realm “Zero Tax Companies” who do not pay any tax. The MAT is ruled by provisions enclosed in section 115JB of Income Tax Act, 1961. MAT is valid to all companies comprising foreign companies.

As per meaning of MAT, the tax obligation of the company will be higher of the following:

  • Income tax of company calculated as per normal provision of income tax.
  • Tax calculated at 18.5% on book profit plus surcharge and cess as applicable.
Question for the Day on the Topic

Consider the following statements

  1. The aim of MAT is to bring into tax realm “Zero Tax Companies” who do not pay any tax.
  2. MAT is valid to all companies comprising foreign companies.

Select the correct ones

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer: C