what is mat in income tax

MAT in income tax stands for Minimum Alternate Tax. It is a provision in the Indian income tax laws that requires companies to pay a minimum amount of tax to the government, irrespective of the tax exemptions and deductions they may have claimed. The objective of MAT is to ensure that companies, especially those making substantial profits, do not avoid paying income tax. MAT is calculated at 15% of the book profit as per Section 115JB of the Income Tax Act, 1961. The tax liability under MAT is determined based on the book profits of the company, and it is applicable to all companies, including foreign companies.