MAT or Minimum Alternate Tax was introduced in 1987 to collect taxes from zero tax companies. It levies a tax rate of 15% on the book profits of companies to bring them in the tax net. Companies can claim MAT credit for taxes paid over their normal tax liability which can be carried forward for 15 years. All companies, including those in Special Economic Zones, are required to pay MAT and file MAT reports. The introduction of MAT helps reduce tax evasion and ensures that companies pay a minimum level of tax.

1. Sushmitha H S
2nd M.com
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. What is Minimum Alternate
Tax or MAT?
Under the provisions of the Minimum
Alternate Tax Act, as per section 115JB, every
company domestic or foreign is required to
pay MAT. MAT is a tax levied under Income Tax
Act of India, 1961.

3. MAT Credit
MAT Report
Applicability of MAT
in SEZs
2
1
3
4
Advance Payment of
Tax

4. MAT Credit
It is entitled to claim credit of excess of MAT
paid over the normal tax liability in the
following years. One can find provisions
relating to carry forward and adjustment of
MAT credit in section 115AA. MAT credit is not
utilized by the company with 15 years, Then it
will lapse.

5. MAT Report
Every company that is liable to pay MAT is
required to furnish a MAT report as prescribed
in form 29B [as per rule 40B of the IT rules].

6. Advance Payment
Of Tax
Under Income Tax Act 1961, every assesses
has to pay tax in advance in case the advance
tax liability is Rs. 10,000 or more during a
financial year. All companies are required to
pay advance tax under section 115JB of the
Income Tax Act.

7. Applicability Of MAT In Special
Economic Zones [SEZs]
MAT directives did not apply to income
generated by companies via operations in
SEZs. This was, however amended by the
finance Act, 2011, and a provision was added,
which made section 115JB applicable to all
companies.

9. • MAT was introduced by the Finance Act, 1987
with effect from assessment year 1988-89.
• Later on it was withdrawn by the Finance Act,
1990 and then reintroduced by Finance [no. 2]
Act, 1996.
• To collect taxes from all the zero tax
companies.
OBJECTIVES

10. PROVISIONS OF MAT
• Tax liability of the company computed as per
the normal provisions of the Income-tax Law.
• Tax computed in above manner can be
termed as normal tax liability.
• Tax computed @ 15% [plus surcharge and cess
as applicable] on book profit .

11. Meaning Of Book Profit
Net profit as shown in the
statement of profit and loss prepared
in avoidance with schedule 3 to the
companies Act, 2013 as increased and
decreased by certain items prescribed
in this regard.

12. Conclusion
Tax is the most important element as
it is the revenue for the government on
which the government operates.
Introduction of MAT is the best step
taken by the government as it will keep
an eye on the zero tax companies as
well as helps in reducing the tax
evasion in our country.

13. REFERENCE
• https://www.bankbazar.com/tax/minimum-
alternate-tax.html
• https://www.finananbooks.com/blog/mat-
minimum-alternate-tax-how-calculate.
• https://cleartax,in/s/tax-planning-under-mat