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Overview

MAT (Minimum Alternate Tax) and AMT (Alternate Minimum Tax) Compliance

MAT (Minimum Alternate Tax) and AMT (Alternate Minimum Tax) are provisions under the Income Tax Act, 1961, designed to ensure that companies and certain taxpayers with significant income but lower taxable income (due to exemptions or deductions) contribute a minimum amount of tax. While MAT applies to companies, AMT is applicable to non-corporate taxpayers such as LLPs and individuals claiming specified deductions. Compliance with MAT and AMT rules ensures adherence to tax laws, avoids penalties, and demonstrates financial transparency.

Importance

1. Fair Taxation : Ensures that entities with high book profits or significant deductions pay a minimum tax.

2. Legal Compliance : Mandates adherence to Sections 115JB (MAT) and 115JC (AMT).

3. Avoidance of Penalties : Prevents penalties and interest for non-compliance with MAT or AMT provisions.

4. Credit for Future Years : Provides MAT/AMT credit, allowing taxpayers to offset taxes in subsequent years.

5. Equity in Taxation : Ensures a balanced contribution to government revenue, even from entities claiming exemptions.



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Features

Features & Benefits of MAT (Minimum Alternate Tax) and AMT (Alternate Minimum Tax) Compliance

Minimum Tax Requirement
Ensures companies and certain taxpayers pay a minimum tax, even with high deductions or exemptions.
Applicability Across Entities
MAT for companies and AMT for non-corporate taxpayers with specified deductions.
Tax Credit Carry Forward
MAT/AMT paid can be carried forward for up to 15 years to offset future tax liability.
Equity in Taxation
Balances tax contributions across profit-earning entities.
Exemption for Small Taxpayers
AMT does not apply to non-corporate taxpayers with income below ₹20 lakh.

MAT and AMT Compliance

Adherence to Global Practices
Aligns with international practices for minimum tax compliance.
Seamless Filing
Integrated with corporate and individual tax return filing processes. Support for Tax Adjustments



Comparison Between MAT and AMT

Feature MAT AMT
Applicability Companies (domestic and foreign) Non-corporate taxpayers (LLPs, individuals)
Tax Rate 15% of book profits 18.5% of adjusted total income
Threshold Limit No threshold Adjusted income exceeding ₹20 lakh
Exemptions IFSC companies, shipping under tonnage tax Income below ₹20 lakh
Carry Forward Credit 15 years 15 years



Frequently Asked Questions

What is MAT?

MAT ensures companies pay a minimum tax of 15% on book profits, even if taxable income is lower due to deductions.

What is AMT?

AMT requires non-corporate taxpayers like LLPs and individuals claiming specified deductions to pay 18.5% on adjusted total income.

Can MAT/AMT be carried forward?

Yes, MAT/AMT paid in excess of regular tax liability can be carried forward for up to 15 years.

Who is exempt from AMT?

Non-corporate taxpayers with adjusted income below ₹20 lakh are exempt from AMT.

What is the due date for MAT and AMT compliance?

Tax payments must be made as part of advance tax installments, with final reporting during ITR filing.

Is MAT applicable to foreign companies?

Yes, foreign companies earning income in India and preparing financials as per the Companies Act, 2013, are subject to MAT.

How is MAT credit utilized?

MAT credit can offset regular tax liability in future years when regular tax exceeds MAT.

What is the difference between MAT and regular tax?

MAT is calculated on book profits, while regular tax is computed on taxable income.

What deductions are added back for AMT computation?

Deductions under Sections 80IA, 80H, 10AA, and 35AD are added back to compute adjusted total income.

What happens if MAT or AMT is not paid on time?

Interest under Sections 234B and 234C may apply for late payment of advance tax or non-compliance.