Basis of Minimum Alternate Tax

Alternative Minimum Tax (AMT)

Comparison (MAT)
Section 115JB of the Income Tax Section 115JC to 115JF of the Income Tax
Governing Section
Act, 1961 Act, 1961

Applicable to non-corporate taxpayers, i.e.,

Individuals, Hindu Undivided Families
Applicable to companies
(HUFs), Partnership Firms, Limited Liability
Applicability (including foreign companies
Partnerships (LLPs), Association of Persons
with income from India).
(AOPs), Body of Individuals (BOIs), and
Artificial Juridical Persons (AJPs).

To ensure that companies that

To extend the concept of MAT to non-
claim various deductions and
Purpose corporate taxpayers who claim certain
exemptions still pay a minimum
deductions and exemptions.
amount of tax.

No minimum turnover or income

Applicable only if Adjusted Total Income
Threshold Limit threshold; applicable to all
(ATI) exceeds ₹20 lakh.
companies.
18.5% (plus surcharge and cess) of Adjusted
15% (plus surcharge and cess) of
Rate of Tax Total Income. However, for LLPs, the rate is
Book Profit.
9%.

Adjusted Total Income (ATI), which is total

income computed under normal provisions,
adjusted for deductions claimed under
Book Profit, i.e., net profit as per
Chapter VI-A {i.e 80IA to 80RRB}(except Sec
the company’s profit and loss
Computation Base 80P), Section 10AA (SEZ units), and 35AD.
account, adjusted for specified
ATI+Deduction 80I to 80RRB(except
additions and deductions.
80P)+deduction u/s 10AA+deduction u/s
35AD - Depreciation allowable if 35AD not
taken

Not applicable to: Not applicable to:

1. Companies in International
Financial Services Centers (IFSC)
1. Individuals, HUFs, AOPs, and BOIs whose
deriving income solely in foreign
adjusted total income is ₹20 lakh or below.
exchange (MAT rate is 9% for
them).
Exemptions from 2. Non-corporate taxpayers not claiming
Applicability 2. 115BAA/115BAB
specified deductions.
 3. Sec.44B/44BBA/44BB/44BBB

4. Life Insurance Company

5. Foreign company not having
PE in India
Available – MAT credit can be
Available – AMT credit can be carried
Tax Credit Carry carried forward for 15 years and
forward for 15 years and can be adjusted
Forward can be adjusted against future
against future normal tax liability.
normal tax liability.

Can be set off in future years Can be set off in future years when tax
Set-Off of Tax Credit when tax payable under normal payable under normal provisions exceeds
provisions exceeds MAT liability. AMT liability.

MAT applies to foreign

companies if they have a AMT is not applicable to foreign companies
Impact on Foreign
permanent establishment (PE) in as it applies only to non-corporate
Companies
India and earn taxable income in taxpayers.
India.
Non-corporate taxpayers availing
Companies availing Section
deductions under Chapter VI-A (except
10AA (SEZ units), 80HHC, 80-IA,
Deductions Affected Section 80P), Section 10AA (SEZ units), and
80-IB, 80JJA, etc., will have to
certain other deductions will have to pay
pay MAT.
AMT.
Applicable if the startup is a Applicable to LLPs and firms if their
Applicability to Startups company and its book profit is adjusted total income exceeds ₹20 lakh and
positive. they claim eligible deductions.
Companies must prepare Book Non-corporate taxpayers liable for AMT
Compliance
Profits and compute MAT must obtain a report from a Chartered
Requirements
liability accordingly. Accountant (CA) in Form 29C.
The MAT rate was reduced from
No major rate changes; remains at 18.5%
Recent Amendments 18.5% to 15% by the Finance Act,
(except for LLPs, where it is 9%).
2019.

1)Credit is allowed even in C.Y AMT is not

1)no need to write notes for applicable 2) in
Notes
each item for Book Profit this chapter deduct unabsobred deph with
normal deph then business loss