InvestorQ : What is the minimum alternate tax (MAT) rate?
ananya Sing made post

What is the minimum alternate tax (MAT) rate?

simran Kaur answered.
2 years ago

MAT or minimum alternate tax is a tax levied by the government of India to facilitate the taxation of zero-tax companies or those companies that show zero or negligible income in order to avoid paying tax.

The tax is categorically directed towards those companies that make huge profits and even pay dividends to their shareholders but pay no tax under the Income Tax Act. Companies do this by taking advantage of the various deductions and exemptions that the Income Tax Act allows.

MAT is applied when the taxable income calculated as per Income Tax Act, 1961, is found to be less than 18.5% of the book profits. The MAT rate has increased from 7.5% in 2000 to 18.5% in 2015.

The normal tax rate applicable to an Indian company is 30% (plus cess and surcharge as applicable), which has been decided to be progressively reduced to 25% by 2019.