Q. With reference to the Minimum Alternate Tax (MAT) in India, consider the following statements:
1.MAT was introduced to ensure that companies with high book profits but zero taxable income under the Income Tax Act still pay a minimum amount of tax.
2.MAT is not applicable to any income earned from life insurance enterprises.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation:
- MAT targets “zero tax” companies that show book profits under the Companies Act but avoid tax liability under the Income Tax Act due to deductions and exemptions.
- MAT does not apply to any income earned from life insurance enterprises, according to Section 115JB(5A).
Source- TMH Indian Economy by Ramesh Singh
