Minimum alternate tax

 Definition                                                          

Minimum Alternate Tax & Alternate Minimum Tax  

 

Minimum Alternate Tax (MAT)  is a measure to incorporate every firm in the 

income tax bracket. It assures that no firm with proper finances and substantial 

income can dodge paying income tax, even after claiming exemptions. It is a 

provision in direct tax to limit tax exceptions that many firms avail to pay a 

minimum amount of corporate tax to the Government. Under the book profit  

Companies Act 2013, a minimum alternate tax is applicable when your taxed 

income is found to be below 15.5% (including surcharge and cess as applied) under 

Income Tax Act. 

 

Alternative Minimum Tax (AMT)  was introduced in 1969 so that wealthy 

taxpayers could not deduct their way to zero tax liability. It puts a halt on the taxes 

a few individuals should pay. It is mainly intended for wealthy taxpayers who may 

have many tax subtractions and pay a minimal amount of their income as tax. The 

alternative minimum tax limits specific tax breaks for impacted taxpayers. It needs 

taxpayers above a particular income threshold to calculate their income tax and 

pay the due tax. The calculation of alternative minimum tax involves removing 

specific tax deductions and breaks. 

 

Similarity Between Minimum Alternate Tax and Alternative Minimum Tax 

 

Both minimum alternate tax and alternative minimum tax can be extended up to 

fifteen years.  

 

Both will lapse after the fifteen-year tenure ends. 

 

Difference Between Minimum Alternate Tax and Alternative Minimum Tax 

 

Minimum Alternate Tax is imposed on firms. On the other hand,  an alternative 

minimum tax is imposed on entities and individuals except for companies. 

  

 

The AMT is calculated as adjusted overall income. On the other hand, a minimum 

alternate tax on book profits.  

 

The AMT rate is 18.5%, . MAT 15%  

  

The alternative minimum tax is not imposed on Capital Gain Exempt. On the other 

hand, the minimum alternate tax is imposed on Capital Gain Exempt. 

 

The minimum alternate tax is imposed when the income tax, including the 

surcharge and the cess, calculated on the overall income, according to the 

provisions mentioned in the Income Tax Act, is below fifteen percent of book profit, 

surcharge, and cess. On the other hand, the alternative minimum tax is imposed 

when the income tax, including surcharge and cess, calculated on the overall 

income according to the provisions mentioned in the Income Tax Act is below 

18.5% of the adjusted overall income, surcharge, and cess. 

 

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