FM Sitharaman ends MAT confusion: Reduced rate to be applicable from FY20

Reduced rate applicable from current FY; final call on fiscal deficit will be taken at Revised Estimate stage

The lower minimum alternate tax (MAT) rate announced as part of the corporation tax rate cuts in September will be applicable from the current fiscal year (2019-20 or FY20), Finance Minister Nirmala Sitharaman clarified on Monday in the Lok Sabha after an error in the Taxation Amendment Bill spooked companies.

For the second time in less than a week, Sitharaman also spoke of the challenges in maintaining fiscal discipline, while comparing the Modi government’s fiscal record with that of the Manmohan Singh government. Sitharaman said a final call on the fiscal deficit will be taken at the Revised Estimate stage.

The Taxation Law Amendment Bill, 2019 was introduced and passed in the Lok Sabha on Monday. It had said the lower MAT rate of 15 per cent, down from 18.5 per cent, will be applicable from the next financial year (2020-21 or FY21), while the Ordinance had said the lower rate will be effective from the current financial year. The corrections were made by way of an official amendment, changing FY21 to assessment year 2020-21.

“The intention has always been to apply reduced MAT rate from the year 2019-20. That error will be corrected through an official amendment now. The original intent was to apply it from 2019-20, which continues to be the case now,” said Sitharaman…Read More