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Question
Q. In the context of Minimum Alternative Tax (MAT), consider the following statements:
Select the correct answer using the codes given below:
Q. In the context of Minimum Alternative Tax (MAT), consider the following statements:
Select the correct answer using the codes given below:Open in App
Solution
The correct option is A 1 only
Explanation:
Statement 1 is correct: It was introduced by the Finance Act, 1987 to bring Zero tax Companies within the ambit of Income tax to ensure they pay a minimum amount of tax to the government.
Statement 2 is incorrect: MAT is levied on the book profit while corporation tax is levied on taxable profit. MAT is applied when the taxable income calculated according to the IT Act provisions is found to be less than 15.5 percent of the book profit under the Companies Act, 2013.
Explanation:
Statement 1 is correct: It was introduced by the Finance Act, 1987 to bring Zero tax Companies within the ambit of Income tax to ensure they pay a minimum amount of tax to the government.
Statement 2 is incorrect: MAT is levied on the book profit while corporation tax is levied on taxable profit. MAT is applied when the taxable income calculated according to the IT Act provisions is found to be less than 15.5 percent of the book profit under the Companies Act, 2013.
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