A CRITICAL STUDY ON MINIMUM ALTERNATIVE TAX IN INDIA

AUTHOR – RAGHUNATH, M, LL.M (TAXATION LAW), SCHOOL OF EXCELLENCE IN LAW, TAMIL NADU DR. AMBEDKAR LAW UNIVERSITY, CHENNAI

BEST CITATION – RAGHUNATH, M, A CRITICAL STUDY ON MINIMUM ALTERNATIVE TAX IN INDIA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (2) OF 2024, PG. 804-808, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

            Minimum alternate taxation is a measure taken by the legislature to address the issue that companies which declare high profits, but pay low or no taxes (‘zero-tax’ companies). Parliament has experimented with numerous approaches to legislate MAT since 1983 and continues to do so in the proposed Direct Tax Code. This paper shows the various changes made in MAT regime over the years and the interpretational problems that have arisen with provisions of MAT credit, advance payment and calculation of book profits. It then considers the demerits of this taxation regime with reference to the economic effects of the burden of this tax, and the attendant compliance and record-keeping costs. With this in mind, this paper argues that the MAT regime should be modified and puts forth two proposals for reform.

Keywords: Minimum Alternative Tax, Companies, Book profits, Zero tax companies