Minimum Alternate Tax (MAT)#
What is MAT?#
MAT ensures companies pay minimum tax even if they show profits but claim heavy deductions.
When Does MAT Apply?#
When tax calculated under normal provisions is less than 15% of "book profits".
Book Profit Calculation#
Book Profit = Net Profit as per books +
Items disallowed under Income Tax +
Items separately added back
MAT Rate#
| Company Type | MAT Rate |
|---|---|
| Domestic companies | 15% |
| Foreign companies | 15% |
| Special economic zone units | 15% |
MAT Credit#
- If MAT > regular tax, pay MAT
- Difference (MAT credit) can be carried forward
- Can be adjusted against regular tax in future years
- Carry forward allowed for 15 years
Exemptions from MAT#
- Startups (up to 10 years)
- Certain power sector companies
- Companies under specific regimes (with conditions)
Computation Steps#
- Calculate book profit
- Calculate 15% of book profit = MAT
- Calculate regular tax
- Pay higher of the two
- Take MAT credit if applicable