What Is Mat In India

All india management aptitude testing service aimats conducts a national level management entrance test for admission to mba and postgraduate management programs of a number of institutes spread across india.

What is mat in india.

How is mat calculated. Rules pertaining to section 115ja are applicable to foreign companies that generate profits through their operations in india. Introduced by the finance act 1987 mat came into effect from assessment year 1988 89. 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. It was introduced in the year 1987 and implement the following year. Presently mat is applicable to companies domestic and foreign but here only mat on company s u s 115jb is discussed.

The common features of mat are as under. In india mat is levied under section 115jb of the income tax act 1961. Features of the mat regime. To improve accountability and to ensure that no company avoided paying taxes the government of india in 1988 came up with the concept of mat which facilitates the taxation of zero tax companies.

Minimum alternate tax or mat is only applicable to companies and not to individuals hufs partnership firms etc.