Although the industry wants the tax rate of MAT to be lowered to 7.5 per cent from 10 per cent currently, sources said, the finance ministry is not in favour of reducing it at a time when increasing revenue has become one of the major concerns of the government.
In 2007-08, the then Finance Minister P Chidambaram had raised the rate of MAT from 7.5 per cent to 10 per cent.
MAT was introduced in 1987 to bring under the tax net companies which paid no or very little tax after taking advantage of the exemptions provided by the Income Tax Act.
Industry wants that rate of MAT to be lowered as it was affecting internal resource generation and blocking expansion and diversification plans.
India Inc, however, is not for removal of MAT. "Everybody who is earning should contribute to the exchequer," said industry chamber FICCI in its pre-budget memorandum to the Finance Ministry.
On the issue, Ernst and Young senior partner Satya Poddar said the government should continue with the MAT during this fiscal.
