The government today proposed to levy Minimum Alternate Tax (MAT) of 18.5 per cent on the book profits of Special Economic Zone developers and units, which was termed as a ‘setback’ by the players. Both the developers as well as units in the tax free enclaves were earlier exempted from MAT under Section 115 JB of the Income Tax Act.
“As a measure to ensure equal sharing of the corporate tax liability, I propose to levy MAT on developers of Special Economic Zones (SEZs) as well as units operating in SEZs,” Mukherjee said.
Changes in the tax rate would be effective April, 2012.
MAT was introduced in 1987 to bring under the tax net companies that paid no or very little tax after taking advantage of the exemptions provided by the Income Tax Act.