Minimum Alternate Tax (MAT) u/s 115JB of the I T Act is to ensure that companies which have book profits but does not have taxable income , pays a minimum amount of tax.The quantum of tax under MAT is determined by comparing total income as computed under general income tax law with the Book Profit computed as prescribed under 115JB.
If the income payable on total income is less than 18.5 % of the book Profit computed u/s 115JB, then the Book profit shall be deemed as total income and company will have to pay 18.5 % tax thereon.
Certain important points
1. The adjustment as contemplated under 155JB is does only if the amounts are debited or credited as the case may be in P & L account.
2. Even those companies earning tax free income u/s 10A, 10B or 10AA are required to pay tax u/s 115JB.
3. MAT does not apply to cases shipping companies who are opting under Tonnage Tax Scheme.
4. 115JB does not affect any amount to be caaried forward under depreciation or business loss or any other loss under I T Act.
5. Levy of interest u/s 234B and 234C is applicable on tax payable u/s 115JB