Minimum Alternate Tax Credit (MAT Credit)

MAT Credit refers to the credit available to a company for the excess Minimum Alternate Tax (MAT) paid over its normal tax liability in a particular year. It allows companies to set off this credit against future regular tax liabilities, ensuring that MAT is not a permanent extra tax.

Key Features: Applicable to companies subject to MAT under the Income Tax Act. MAT Credit arises when MAT paid > normal tax liability. The credit can be carried forward up to 15 years to offset regular tax in future years. Ensures that companies are not unduly burdened by MAT over time.

Example (India): A company reports book profits of ₹10 crore. MAT at 15% = ₹1.5 crore. Normal tax liability calculated under regular provisions = ₹1 crore. MAT Credit = ₹1.5 crore – ₹1 crore = ₹0.5 crore. The company can use this ₹0.5 crore credit to reduce future tax liabilities over the next 15 years.