Even though the government has accepted the demand of industry to levy Minimum Alternate Tax (MAT) on book profit in the Direct Tax Code (DTC),the finance ministry today said imposing MAT on gross assets is a better way to tax as it ensures optimal utilisation of assets.
This suggests that even though the DTC has been referred to a Parliamentary panel for vetting,MAT on gross assets is an idea that may be implemented at a later stage. MAT is an effective way to ensure optimum utilisation of assets to make it asset based. I still think it is the best thing to do but if you are not ready for it,we are not pushing it now,may be it will come later, Revenue Secretary Sunil Mitra said at a CII seminar on DTC here. The original draft of DTC had proposed levying two per cent MAT on gross assets,which was vehemently opposed by India Inc. It argued that such a tax regime would discourage companies to make investments in infrastructure and capital assets. MAT is charged from profit-earning companies which do not pay any tax because of various exemptions.
In the revised draft,the Centre buckled under the pressure and retained the current practice of imposing MAT on book profit. DTC,which is expected to make Income Tax Act simple and bring in a transparent tax regime,is likely to be implemented from April one,2012.
Mitra added that the Parliament panel will invite suggestions on the bill and there are still chances of reconsideration in the legislation.