Present Mat Rate In India

Globally and in india 6 legislative history of alternative minimum tax on companies in india 8 mat rates and regular tax rates for companies 10 mat credit and carry forward mechanism for companies 12 mat on companies and phasing out of tax incentives 16 rationalising mat on companies.

Present mat rate in india. I normal tax liability or ii mat. Minimum alternate tax mat is a tax effectively introduced in india by the finance act of 1987 vide section 115j of the income tax act 1961 it act to facilitate the taxation of zero tax companies i e those companies which show zero or negligible income to avoid tax under mat such companies are made liable to pay to the government by deeming a certain percentage of their book. How is mat calculated. Normal tax rate applicable to an indian company is 30 plus cess and surcharge as applicable.

She also cut mat rate to 15 from 18 5. Finance minister nirmala sitharaman had on september 20 slashed the corporate tax rate to 22 without exemptions or incentives from current 30 offering a 1 45 lakh crore boost to the economy which grew by its slowest pace in six years in april june 2019 20 at 5. Including a surcharge and cess the effective tax rate for existing companies would now come down to 25 17 from 35. Current challenges and suggestions 18.

The present mat rate as of fy 2019 20 is 15 of book profit previously 18 5 plus applicable cess and surcharge. The finance minister said the current corporate tax rate has been brought down to 22 from 30. The fm also reduced mat from the present rate of 18 5 per cent to 15 per cent giving relief to those companies that will continue to avail of incentives and exemptions. Further in order to provide relief to companies which continue to avail exemptions incentives the rate of mat shall be applicable at reduced rate of 15 percent from 18 5 percent for fy 19 20.

The rate of this cess has changed since its introduction in 2004 at 2 to 4 as of fy 2020 21 reduced rate of tax for certain existing domestic companies. She added the effective corporate tax rate for the companies would be 25 17 inclusive of all. Mat credit is mainly a problem for several companies that are present in sezs as these locations have tax holidays. As amended by finance act 2020 the tax liability of a company will be higher of.

The key reason for introduction of mat is to ensure minimum levels of taxation for all domestic and foreign companies in india.