The government on Monday raised the Minimum Alternate Tax (MAT) to 15 per cent even as it abolished the Fringe Benefit Tax (FBT) and Commodities Transaction Tax (CTT).
The government did not change the corporate tax rates. Unveiling the budget for 2009-10, Finance Minister Pranab Mukherjee said, "MAT was introduced to address inequity in taxation of corporate taxpayers. In the quest for greater equity, I propose to increase the rate of MAT to 15 per cent of book profit from the present rate of 10 per cent."
MAT is the amount companies pay as tax on their book profits. However, the minister granted some relief to companies, allowing them to adjust their tax liability under MAT from seven years to 10 years.
Announcing the decision of the government to do away with the FBT, he said, "this tax has been perceived as imposing considerable compliance burden. Empathising with these sentiments, I propose to abolish the fringe benefit tax."
FBT was imposed by the then Finance Minister P Chidambaram in 2005 on the value of certain fringe benefits provided by employers to their employees.
