Minimum Alternate Tax (MAT)

What is MAT, the MASSIVE demand that has been put on FIIs and FPIs?

  1. In 1987, PM Rajiv Gandhi, in charge of the Finance portfolio, introduced what he called a “Minimum Corporate Tax”. This was to target corporates which made profits & paid dividends to shareholders, but paid very little or, in some cases, zero taxes.
  2. The law back then allowed several deductions and exemptions which could be utilised to significantly lower or escape tax liability.
  3. In came P.Chidambaram & Yashwant Sinha respectively along the FM portfolio and FIIs (foreign institutional investors) were exempted from MAT.
  4. But the IT dept. raised hue and cry when they issued notices to some of the FIIs for past settlements.
  5. You know how powerful these global investors lobbies are right?