Minimum Alternatine Tax

A company prepares its hit and loss account gibe to provisions of Companies Act 1956 ( i. e , part- II of schedule VI ). However it is liable to pay income tax on pull in computed as pert the provisions of Income Tax Act. It was noticed that legion(predicate) companies were not paying(a) any tax due to secret code profit or negative profit derived from computation do in compliance with the provisions laid down in the Income Tax. In other words, they were earning profit but were not paying tax. These types of companies are called Zero Tax Companies. To overcome this bottleneck and increase revenue collection, section 115JA came in to existence w. e. f. assessment division 1997-98. According to section 115JA if the taxable income of a company is less(prenominal) than 30% of the book profit, the total income chargeable to tax of such company shall be 30% of such book profit and tax is payable on such income at appointed rate applicable for the relevant assessment year. This is termed as nominal Alternative Tax.

The matted rate has been changed from time to time as given below: SECTION ASSESSMENT YEAR MAT RATE 115JA 1997-98 to 2000-01 30% of Book Profit is deemed as total income and tax is payable at the applicable rate 115JB... If you want to have got a full essay, order it on our website: Orderessay

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