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TMI BlogMinimum Alternate Tax (Mat) on CompaniesX X X X Extracts X X X X X X X X Extracts X X X X ..... in infrastructure and power sectors [section 80-IA]. 2. Payment of a minimum tax by deeming 30 per cent of the book profits computed under the Companies Act, 1956 as taxable income, in a case where the total income as computed under the provisions of the Income-tax Act, 1961 is less than 30 per cent of the book profit where the total income, as computed under the normal provisions of the Income-tax Act is more than 30 per cent of the book profit, tax shall be charged on the same. 3. The effective minimum alternate tax, at the existing rates of taxation, works out to 12 per cent of the book profits. 4. Income arising from Free Trade Zones (FTZs) [section 10A], 100 per cent Export-Oriented Undertakings (EOUs) [section 10B], chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and 20 per cent to non-export activities (which are otherwise taxable). Thus, out of the 80 per cent of the export profits, only 10 per cent will bear tax at the effective rate of 4.3 per cent including surcharge. Company C Book profits 100 Less : Export profits 90 Balance profits 10 [assuming that the profit rate is same in export and other activities] As the balance profits are less than 30 per cent of the book profits, MAT will be levied on 30 per cent of the book profits comprising 20 per cent attributable to export and 10 per cent to non-export activities (which are otherwise taxable). Thus, out of the 90 per cent of the export profits, only 20 per cent will bear tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company mentioned in that section. In other words, except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc., would apply in respect of the provisions of this section. 3. The scheme of the Income-tax Act also needs to be referred to. Section 4 of the Income-tax Act charges to tax the income at any rate or rates which may be prescribed by the Finance Act every year. Section 207 deals with the liability for payment of advance tax, and section 209 deals with its computation based on the rates in force for the financial year, as are contained in the Finance Act. The rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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