Annual Assessment Basis

• MAT applicability is evaluated independently for each assessment year.
  
• It depends on the book profit reported in the audited financial statements.
  
• If the income tax payable under normal provisions is less than 15% of book profit, MAT becomes applicable.
  
• Every company must compute both normal tax and MAT liability annually.
  
• The higher of the two amounts is payable as tax for that year.
  

Computation of Book Profit

• Book profit is calculated as per Section 115JB using the Profit and Loss Account prepared under the Companies Act.
  
• Specific additions and deductions are applied to the net profit before tax.
  
• Adjustments include deferred tax, provisions, revaluations, and exempt income.
  
• The resulting figure is compared with regular taxable income to determine MAT applicability.
  
• Book profit must be certified by a Chartered Accountant in Form 29B.
  

Applicability Across Company Types

• MAT applies to all companies including private, public, domestic, and foreign companies.
  
• Exceptions include companies claiming benefits under Section 115BAA or 115BAB.
  
• Companies with income from life insurance or IFSC qualifying activities may also be exempt.
  
• Companies must verify eligibility status and notification-based exclusions each year.
  
• Foreign companies must consider permanent establishment and treaty positions.
  

Comparison with Regular Tax

• Normal income tax is computed as per the Income Tax Act considering deductions, exemptions, and set-offs.
  
• MAT is applied only when the normal tax is lower than the MAT liability.
  
• MAT credit is generated if MAT is paid in excess of normal tax.
  
• If regular tax is higher, MAT is not applicable for that year.
  
• Both computations must be documented and retained for audit.
  

Audit and Compliance Requirements

• Companies must file Form 29B electronically along with the income tax return.
  
• Chartered Accountant certification is mandatory for MAT computation and applicability.
  
• Form 3CD under tax audit must also include MAT-related disclosures.
  
• Consistency with audited financial statements is essential for accurate evaluation.
  

The process must be repeated annually to determine whether MAT applies.