mat stands for in tax

Under a MAT structure, the general annual grant (GAG) in respect of each academy would be received by the MAT and would be under the control of the trustees. The taxable income of Shreyan Paper Mills. 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. (ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees. 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. of computation of book profit). will be Rs. No interest is paid to the taxpayer in respect of such credit. Before proceeding on how MAT is calculated, first provisions related to MAT calculation is important to learn: Income tax Payable shall be the higher of the following amounts: a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. MAT stands for Minimum Alternate Tax, and it was launched to reduce (if not to bridge) the gap between the tax accountability as per income calculation and book profits. 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. Minimum Alternate Tax (MAT) was introduced in the direct tax system to make sure that companies having large profits and declaring substantial dividends to shareholders but who were not contributing to the Govt by way of corporate tax, by taking advantage of the various incentives and exemptions provided in the Income-tax Act, pay a fixed percentage of book profit as minimum alternate tax. Read Choose from Paytm First vs Ola Money Credit Card. MAT credit will be allowed carry forward facility for a period of 15 assessment years immediately succeeding the assessment year in which MAT is paid. Normal tax, in this case, means the tax payable on the basis of normal computation of total income of the company. 1. Now after the insertion of Minimum Alternate Tax Provisions companies have to pay a particular amount of tax termed as MAT, so they come under the tax net … 1 crore)}, Tax on total income computer under MAT provisions (at present 18.5% + cess), Add Surcharge: If total income exceeds Rs. excess of MAT paid over the normal tax liability. TaxGuru.in really helps us learn something new everyday. What will be the tax liability of Shreyan Paper Mills Ltd. (ignore cess and surcharge)? Subscribe to our mailing list and get interesting stuff and updates to your email inbox. If in any year the company pays liability as per MAT, then it is entitled to claim credit of MAT paid over and above the normal tax liability in the subsequent year(s).The provisions relating to carry forward and adjustment of MAT credit are given in section 115JAA. the assessee is a resident of a country with which India does not have an agreement of the nature referred to in clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies. 29B certifying that the book profit has been computed in accordance with the provisions of section 115JB. Taxable Income as per normal provision of Income Tax Act – ₹ 50,00,000, Book Profits as per section 115JB – ₹ 1,01,00,000, Tax Payable @ 30% plus edu cess of 4% – 31.20% of 50,00,000 = ₹ 15,60,000. 18,40,000. 1 crore + (Total Income – Rs. The taxable income of Sohrab Spinning Mills Limited. Minimum Alternate Tax. In order to submit a comment to this post, please write this code along with your comment: 775ea3a532523402372302bc24c795fb. As per Explanation 1 to section 115JB(2) “book profit” for the purposes of section 115JB means net profit as shown in the statement of profit and loss prepared in accordance with Schedule III to the Companies Act, 2013 as increased and decreased by certain items: Computation of Book Profit with Practical examples will discuss in Article no. Tax payable @ 18.5% + Surcharge @ 7% – 19.795% of ₹ 1,01,00,000 = ₹ 19,99,295. Tax on total income computer under MAT provisions (at present 18.5%), Less Marginal Relief, if total income exceeds Rs.1 crore {Formula: Tax on Rs. First of all calculate tax as per normal provisions of Income Tax, Now compute tax payable as per MAT provisions, Hence, Tax Payable by Company before marginal relief = Rs. MAT credit can be better explained with the help of an illustration. 2. A company is entitled to claim MAT credit i.e. Thus, the tax liability of Sohrab Spinning Mills Ltd. will be Rs. The credit of MAT can be utilized by the company in the subsequent year(s). 1,01,00,000 = Rs. ANSWER: Minimum Alternate Tax . Income tax Payable shall be the higher of the following amounts: Let us understand with an example: Sanyam Ltd. has given you the following figures to calculate the tax payable for Assessment Year 2019-20. Book profit of the company computed as per the provisions of section 115JB is Rs. MAT liability (excluding cess and surcharge) @ 18.50% on Rs.18,40,000 will come to Rs. The tax computed by applying 18.5% (plus surcharge and cess as applicable) on book profit is called MAT. c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge. 19,50,000, Total Marginal Relief = ₹ 19,99,295 – ₹ 19,50,000 = ₹ 49,295, Education Cess @ 4% on ₹ 19,50,000 = ₹ 78,000. 14 in detail. Education Cess: 3% on Tax Payable + Surcharge. This Article is restricted to Basic framework of MAT. 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.

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