Wednesday, April 2, 2014

Minimum Alternate Tax (MAT)

Objective behind the int roduct ion of MAT:

Normal ly; a comapny is l iable to pay tax on the income computed in
accordance wi th the provisions of the income tax Act , but the prof i t &
loss account of the company is prepared as per provisions of the
Companies Act . There are large numbers of companies who had book
prof i ts as per thei r prof i t and loss account but are not paying any tax
because income computed as per provisions of the income tax act is
ei ther nil or negative or insigni f icant . In such case, a though the
companies were showing book prof i ts & declar ing dividends to the
shareholders, they are not paying any income tax. These companies are
popular ly known as Zero Tax companies. Inorder to br ing such companies
under the income tax act net , MAT is introduced.

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