Concept of MAT

[Rahul Bagaria]

Can someone please beirf me about the concept of 'MAT'

[Guest]

There were large no.of companies who had book profits as per their Profit & loss a/c but were not paying any tax because income computed as per the provisions of the income tax act was either nil or negative . in such case although the companies were showing book profits and declaring dividends to the sharholders they were not paying any income tax. These companies are popularly known as Zero tax companies. In order to bring such companies under the income tax net, section 115JA Was introduced w.e.f.1997-98. It is called minimum alternate tax.

[Mukesh Kumar]

Thanks CA (Mr.) Rajan R Dhawade

AI Summary

Section 115JA Introduced to Ensure Zero Tax Companies Pay Minimum Alternate Tax (MAT) on Book Profits A query was raised regarding the concept of Minimum Alternate Tax (MAT). An expert explained that many companies reported book profits but paid no income tax due to nil or negative taxable income under the Income Tax Act. These companies, known as zero tax companies, still declared dividends. To address this, Section 115JA was introduced in 1997-98 to ensure such companies pay a minimum amount of tax, termed as MAT. Another participant expressed gratitude for the explanation.