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MCQ Self Challenge # 0080 on Minimum Alternative Tax and Alternative Minimum Tax

Minimum Alternative Tax and Alternative Minimum Tax

 

Dear Professional Seniors & Friends,
Warm Greeting!

Here is the Next post of #MCQ on concept based practical professional knowledge on #MAT & #AMT in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 80.1: A Company has Book Profit of Rs 350 Crore from Life Insurance Business and taxes as per normal Income Tax is less than MAT/AMT on Book Profit. What is the Rate of Tax Applicable on Company?

A. Mat is applicable @ 18.5% since it is a company.
B. AMT is applicable @ 18.5 % since it is a company.
C. Income Tax @ 30 % is applicable & No MAT/AMT applies.
D. AMT is applicable @ 9 % since it is a company.

MCQ 80.2: What is the rate of MAT/AMT applicable in case of non-Corporate Assessee being a unit located in International Financial Services Centre. (From F.Y 18-19)

A. Mat is applicable @ 18.5% since it is a non company.
B. AMT is applicable @ 18.5 % since it is a non company.
C. Income Tax @ 30 % is applicable & No MAT/AMT applies.
D. AMT is applicable @ 9 % since it is a non company.

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CA Sanjay Kumar Agrawal
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Answer MCQ Self Challenge # 0080

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on provisions relating application of MAT and AMT

 

Answer to MCQ 80.1: C) Income Tax @ 30 % is applicable & No

MAT/AMT applies.

 

Answer to MCQ 80.2:  D) AMT is applicable @ 9 % since it is a non

company.

 

Practical Analysis for MCQ 80.1 & 80.2 :-                                                                             

  • Applicability and non-applicability of MAT – As per section 115JB, every taxpayer being a company is liable to pay MAT, if the Income-tax (including surcharge and cess) payable on the total income, computed as per the provisions of the Income-tax Act in respect of any year is less than MAT which is 18.5% of its Book-profit(Plus surcharge, health & education cess).
  • From the above it can be observed that the provisions of MAT are applicable to every company whether public or private and whether Indian or foreign.
  • However, as per section 115JB(5A) MAT shall not apply to any income accruing or arising to a company from life insurance business referred to in section 115B.
  • MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.

 

Applicability and non-applicability of a AMT

  • The provisions of MAT are applicable to a corporate taxpayer only. The provisions relating to AMT are applicable to non-corporate taxpayers in a modified pattern in the form of Alternate Minimum Tax, i.e., AMT. Thus, it can be said that MAT applies to companies and AMT applies to a person other than a company. The provisions relating to AMT are given in sections 115JC to 115JF
  • AMT is levied @ 9% in case of a non-corporate assesses being a unit located in International Financial Services Centre and deriving its income solely in convertible foreign exchange. Surcharge and cess as applicable will also be levied.
  • Based on the above analysis, correct answer MCQ 80.1: C) Income Tax @30 % +Surcharge cess, No Mat Applicable as it is an life insurance company.

 

  • Correct answer MCQ 80.2 : D) AMT is applicable @ 9 % since it is a non company and being a unit of an International Financial Services Centre.

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

 

CA Sanjay Kumar Agrawal

Mobile: 9810116321

 

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

Webpage: http://www.casanjay.me/

Facebook: https://www.facebook.com/CA.Sanjay.K.Agrawal/

Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

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