Understanding Section 115JB of Income Tax Act (Minimum Alternate Tax)

• October 26, 2019
• CA Chandan Agarwal's Office

Background

MAT was first introduced by Finance Act 1996, even after 13 years many find it difficult to understand what really MAT is. Here in this article I will try to ease the provision in simpler form hoping I can make the readers understand what really Minimum Alternate Tax is? First thing that should be kept aside is the fact that MAT provisions are only applicable to Companies either Private Limited or Public Companies.

Difference in Provision of Income Tax and Companies Act.

Income Tax Act as well as Companies Act both governs companies, and company needs to provide their Income Statement (Profit and Loss Account) and Balance Sheet to the Income Tax department while Preparing Tax Returns and also Final accounts are to be audited and submitted as Annual Returns under Companies Act. Now the Idea of setting the whole back ground is that the Taxable Income calculated under Income Tax Act is different than the profit calculated under Companies Act. You might wonder why? Let us understand this with a few examples.

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