MINIMUM ALTERNATE TAX
Albert Einstein once said that the hardest thing in the world to understand is income tax. The statement rings true as tax laws are quite complicated and requires a great deal of time and effort to understand them. This article focuses on one of such complicated areas in tax which was introduced as a synonym to the phrase “Giving in one hand and taking it back in another”. This area of Tax is rightly called as Minimum Alternate Tax (MAT).
OBJECTIVE OF MAT REGIME
The concept of MAT was introduced under the Income Tax Act, 1961 (‘the Act’) to tax “Zero Tax” companies, i.e., com – panies that make high book profits and declare substantial dividends to their shareholders but have no or in significant taxable income under the Income Tax Act because of the exemptions, deductions and incentives provided thereon in the form of a liberal rate of depreciation, sector and region specific exemptions, deductions etc. MAT is in consonance with a fundamental canon of taxation-all entities must be taxed in proportion to their ability to pay.
Click on the Download link below to access complete article.
Download Pdf
