Book Profit

Tax Glossary Definition

Book Profit

Book Profit – Book profit is the profit calculated under Section 115JB of the Income Tax Act for the purpose of Minimum Alternate Tax (MAT). It is generally based on the profit as per the company’s financial statements, adjusted for certain items as specified by the Act. This ensures that companies pay a minimum level of tax, even if their taxable income is reduced due to exemptions or deductions.

Example: A company with multiple tax exemptions may have a low taxable income, but MAT is calculated on book profit to ensure the company pays a minimum tax liability.

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