difference of Surcharge and Cess also ? Thus, the tax liability of Shreyan Paper Mills Limited. Exempt and Zero-Rated Goods and Services . There is a credit of MAT of Rs. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Minimum Alternative Tax (MAT)- Meaning, Applicability & Brief Provisions. Note: MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange. Since Income Exceeds ₹ 1 crore, Marginal Relief is to be calculated (i.e. 8,52,000 (plus cess as applicable), being higher than the MAT liability. So let’s try to understand it with the help of an example: As mention above Computation of Book Profit along with various practical examples and its applicability on IND AS will discuss in Article No. As discussed in earlier part, a company has to pay higher of normal tax liability or liability as per MAT provisions. Initially the concept of MAT was introduced for companies and progressively it has been made applicable to all other taxpayers in the form of AMT. MAT credit can be better explained with the help of an illustration. 18,40,000. However, as per section 115JB(5A) MAT shall not apply to any income accruing or arising to a company from life insurance business referred to in section 115B. 28,40,000 will amount to Rs. 1 crore)}. Book profit of the company computed as per the provisions of section 115JB is Rs. MAT stands for Minimum alternate tax. The tax computed by applying 18.5% (plus surcharge and cess as applicable) on book profit is called MAT. Subscribe to our mailing list and get interesting stuff and updates to your email inbox. MAT stands for Minimum Alternate Tax and AMT stands for Alternate Minimum Tax. As per Explanation 4 to section 115JB as amended by Finance Act, 2016 with retrospective effect from 1/4/2001, it is clarified that the MAT provisions shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if—. 1 crore + (Total Income – Rs. MAT is defined as Minimum alternate tax somewhat frequently. Provided that where the amount of Foreign Tax Credit (‘FTC’) allowed against the MAT exceeds the amount of such FTC admissible against the tax payable by the assessee under normal provisions of the Income-Tax Act, then, while computing the amount of FTC under this subsection, such excess amount shall be ignored. To add to the complexity, in provinces that charge GST/PST, some items are exempt from the GST but not from the PST and vice versa (if in doubt, check the provincial sales tax information bulletins for Quebec, Manitoba, Saskatchewan, and British Columbia). The set off in respect of brought forward MAT credit shall be allowed in the subsequent year(s) to the extent of the difference between the tax on its total income as per the normal provisions and as per the MAT provisions. Higher of the two is applicable; Mat Credit may be carried forward to next 15 Years. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. b. 8,40,000. for Assessment year 2017-18 , tax rate would be 29% where turnover or gross receipt of the company does not exceed Rs. The company can carry forward the MAT credit for adjustment in subsequent year(s), however, the MAT credit can be carried forward only for a period of 15 years after which it will lapse. 2. As per section 115JB, every taxpayer being a company is liable to pay MAT, if the Income tax (including surcharge and cess) payable on the total income, computed as per the provisions of the Income-tax Act in respect of any year is less than 18.50% of its book-profit + surcharge (SC) + education cess (EC) + secondary and higher education cess. MAT stands for Minimum Alternate Tax, described as a direct tax that has to be paid by the companies that are enjoying tax benefits or tax exemptions, instead of having huge profits, under various schemes framed under Income Tax Act. The tax liability of a company will be higher of: (i) Normal tax liability, or (ii) MAT. MAT was introduced to ensure that no taxpayer with substantial income could avoid having a tax liability through exclusions, deductions, or incentives available under the provisions of the Act.