Mat Not A Sensible Tax

As regards the new tax, namely MAT on zero tax companies Mr Chidambaram has erred atleast in one respect, namely, by going back on the promise contained in section 80IA of the Income Tax Act 1961, to the effect that new industrial undertakings set up in backward areas/states like Himachal Pradesh, Assam etc, would enjoy a five year tax holiday. MAT proposes to tax the same at 12.9 per cent. This is not correct step. Further, the MAT on such companies would result in reduced investments in these backward areas/states and might even result in the closure or shifting of some of these industries to other more developed or lucrative areas. It is no doubt true that MAT will act as a punishment to the most successful industries, while favouring the second rate companies, which litter the Indian industrial scene with impunity. It is hoped that Mr Chidambaram will heed to saner advice. Whether given by an intellectual or a journalist or other people, and would remove the MAT and reduce the subsidies and do good to the Indian economy.