The Minimum Alternative Tax (MAT) will become irrelevant with removal of tax incentives and reduction in corporate tax rate to 25 per cent over next four years, Revenue Secretary Shaktikanta Das said.
"When corporate tax rates come down over a period of time, ... MAT may not be required," he said.
"When exemptions go and everybody starts paying a lower corporate tax of 25 per cent then there may not be a need for a MAT because every unit would be tax paying unit," he added.
MAT was introduced in 2011 and it is a tax paid on the book profit. The current rate of MAT is 18.5 per cent.
In the Budget speech Finance Minister Arun Jaitley proposed to bring down basic rate of Corporate Tax to 25 per cent from 30 per cent in next four years.
"This process of reduction has to be necessarily accompanied by rationalisation and removal of various kinds of tax exemptions and incentives for corporate taxpayers, which incidentally account for a large number of tax disputes," he had said.
The MAT was originally brought into play to bring into the tax net large domestic corporates who did not pay taxes by making use of various incentive schemes.
There has been demand by various quarters to remove MAT from SEZs which has not been accommodated by the Finance Ministry.
The ministry has rejected demands of the Commerce Ministry to remove MAT on special economic zones (SEZs).
"So far as SEZs are concerned we have to look at what has been done rather than what has not been done. What has been done is very significant," he said.
