Minimum Alternate Tax
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The company that have generation income during the year but have reduced its tax liability to nil or negligible by taking advantage of various tax laws (concessions, incentives etc) is called Zero tax company.
MAT stands for Minimum Alternate Tax. The objective to MAT is to bring into tax ambit “Zero Tax Companies” who do not pay any tax.
As per definition of MAT, the tax liability of company will be higher of the following:
The MAT is governed by provisions contained in section 115JB of Income Tax Act, 1961.
Book Profit means net profit as shown in the P & L Account.
MAT is applicable to all companies including foreign companies.
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