Direct tax regarding mat

MAT : As per tax law, company pays tax on income computed according to the provisions of Income tax act whereas the profit and loss account of the company is prepared as per companies act. Due to this large number of companies who were incurring good amount of Profit (as per profit and loss a/c) and declaring dividends to their shareholders were not liable to pay any income tax as their tax payable as per income tax act was either zero or very less. These companies comes into category of zero tax companies.

Hiiiii friend.... MAT stands for Minimum alternate Tax and AMT stands for Alternate Minimum Tax. **MAT :** As per tax law, company pays tax on income computed according to the provisions of Income tax act whereas the profit and loss account of the company is prepared as per companies act. Due to this large number of companies who were incurring good amount of Profit (as per profit and loss a/c) and declaring dividends to their shareholders were not liable to pay any income tax as their tax payable as per income tax act was either zero or very less. These companies comes into category of zero tax companies. To make such companies pay tax on their income who enjoy tax exemptions and incentives under various sections of the tax act, government imposed MAT. As per the MAT provision, zero tax companies are required to pay a fixed percentage of Book profit ( profit and loss account) i.e. 18.5% as MAT. and surcharge as applicable. **AMT:** AMT is similar to MAT, any entity or individual whose adjusted total income exceeds Rs. 20 lakhs is liable to Pay AMT @ 18.5%. and surcharge as applicable. Regards,