{"id":21431,"date":"2024-03-12T02:39:53","date_gmt":"2024-03-11T21:09:53","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=21431"},"modified":"2025-04-06T12:11:19","modified_gmt":"2025-04-06T06:41:19","slug":"what-is-minimum-alternate-tax-mat","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-minimum-alternate-tax-mat\/","title":{"rendered":"What is Minimum Alternate Tax (MAT)?"},"content":{"rendered":"<h2>About Minimum Alternate Tax (MAT)<\/h2>\n<ul>\n<li>It is a\u00a0provision in the\u00a0Income Tax Act of India.<\/li>\n<li>It primarily applies to companies and is designed to\u00a0ensure that companies\u00a0that report substantial book profits but pay little to no income tax due to various exemptions and deductions\u00a0are subject to a minimum level of taxation.<\/li>\n<li>The primary objective behind the MAT tax in India is to\u00a0curb tax avoidance by companies that manipulate their financial statements to reduce their taxable income artificially.<\/li>\n<li>With the introduction of MAT, companies have to\u00a0pay a fixed percentage of their profits as MAT.<\/li>\n<li>MAT is\u00a0applicable to all companies, including foreign companies.\u00a0\n<ul>\n<li>However, it\u00a0does not apply to companies that have\u00a0been granted exemption under Section 10AA of the Income Tax Act, which\u00a0pertains to Special Economic Zones (SEZs).<\/li>\n<\/ul>\n<\/li>\n<li>MAT is\u00a0calculated under Section 115JB of the\u00a0Income-tax Act.\u00a0<\/li>\n<li>All companies are required to pay corporate tax based on which is\u00a0higher of the following:\n<ul>\n<li>Normal Tax Liability: Tax computed\u00a0as per the normal provisions of the Income-tax Law, i.e., by applying the relevant\u00a0tax rate to the taxable income of the company.<\/li>\n<li>Minimum Alternate Tax (MAT): Tax computed at\u00a015% (previously 18.5%) on book profit plus cess and surcharge.<\/li>\n<\/ul>\n<\/li>\n<li>MAT is calculated on the &#8220;book profits&#8221; of a company, which is different from the taxable profits computed under the regular provisions of the Income Tax Act.<\/li>\n<li>What is MAT credit? When the amount of MAT for a company\u00a0is greater than its\u00a0normal tax liability,\u00a0the difference between MAT and normal tax liability\u00a0is called MAT Credit.\u00a0<\/li>\n<\/ul>\n<h2>Key Facts about Vivad se Vishwas (VSV) Scheme<\/h2>\n<ul>\n<li>\u201cVivad se Vishwas Scheme\u201d or \u201cNo Dispute but Trust Scheme\u201d is\u00a0a direct tax scheme introduced by the Government of India in 2020 for\u00a0settling disputes between taxpayers and the income tax department.<\/li>\n<li>It aims to minimize tax-related litigation.<\/li>\n<li>Under this scheme, the\u00a0interest and penalty associated with the disputed tax amount is\u00a0completely waived off on the final settlement of the disputed tax amount.\u00a0<\/li>\n<li>There was a time\u00a0limit set for the payment of taxes\u00a0under the scheme.<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What is Cess?<\/h3>\n<p>Cess is a form of tax charged\/levied over and above the base tax liability of a taxpayer. A cess is usually imposed additionally when the state or the central government looks to raise funds for specific purposes. Cess is not a permanent source of revenue for the government, and it is discontinued when the purpose of levying it is fulfilled. It can be levied on both indirect and direct taxes.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.taxscan.in\/assessee-entitled-to-claim-credit-for-mat-under-vsv-scheme-for-year-under-consideration-itat\/380889\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Assessee entitled to Claim Credit for MAT under VSV Scheme for year under consideration: ITAT [Read Order]\u00a0<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Minimum Alternate Tax (MAT) is to curb tax avoidance by companies that manipulate their financial statements to reduce their taxable income artificially.<\/p>\n","protected":false},"author":5,"featured_media":21432,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-21431","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21431","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=21431"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21431\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/21432"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=21431"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=21431"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=21431"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}