MAT made easy
What is MAT?
Applicability: 1. It is applicable to all Companies
Companies avoid tax by booking excess expenses thereby reducing the amount of tax to be paid. To curb this the IT dept has brought out MAT. This is applicable only to Companies
What is Book Profit?
There are certain expenses which are to be disallowed to ascertain the book profit. A fixed rate of 18.055% is calculated as tax on the book profit.
Expenses Disallowed while ascertaining Book Profit
The following expenses are to be disallowed:
Any income u/s 10.
Prior period expenses Provision for Bad debts Unascertained liabilities Income Taxes paid Losses of Subsidiary company Reserves Penalties under other laws
Book Name here
What rate must MAT be paid?
MAT is paid at a fixed rate of 18.055% on the Book Profit. The difference between the amount of MAT paid and the regular tax is the amount of tax the company will have to pay when they are subject to a tax audit.
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