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Govt unlikely to tinker with minimum alternate tax

Govt unlikely to tinker with minimum alternate tax
PTI
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First Published: Fri, Jun 19 2009. 04 25 PM IST
Updated: Fri, Jun 19 2009. 04 25 PM IST
New Delhi: The finance ministry is unlikely to tinker with the 10% Minimum Alternate Tax (MAT), the amount companies getting tax exemptions pay on their book profits, despite the industry chambers’ demand to reduce the same.
Although the industry wants the tax rate of MAT to be lowered to 7.5% from 10% currently, sources said, the finance ministry is not in favour of reducing it at a time when increasing revenue has become one of the major concerns of the government.
In 2007-08, the then finance minister P. Chidambaram had raised the rate of MAT from 7.5% to 10%.
MAT was introduced in 1987 to bring under the tax net companies which paid no or very little tax after taking advantage of the exemptions provided by the Income Tax Act.
Industry wants that rate of MAT to be lowered as it was affecting internal resource generation and blocking expansion and diversification plans.
India Inc, however, is not for removal of MAT. “Everybody who is earning should contribute to the exchequer,” said industry chamber FICCI in its pre-budget memorandum to the finance ministry.
On the issue, Ernst and Young senior partner Satya Poddar said the government should continue with the MAT during this fiscal.
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First Published: Fri, Jun 19 2009. 04 25 PM IST