In the Union Budget of which financial year was the Minimum Alternate Tax (MAT) first introduced in India to ensure that zero tax companies paid a minimum amount of tax?

Introduction / Context:
Minimum Alternate Tax (MAT) is an important provision in the Indian tax system aimed at companies that report high profits but pay little or no income tax due to various exemptions and incentives. Competitive exams often ask when MAT was first introduced, because it marks a significant step in India's tax policy reforms. This question focuses on the specific financial year of the Union Budget in which MAT was first brought in to ensure that so called zero tax companies contributed a minimum amount of tax to the exchequer.

Given Data / Assumptions:

- The subject is the Minimum Alternate Tax (MAT).- We are asked about the Union Budget financial year in which MAT was first introduced.- The options list financial years in the early and mid 1990s.- We assume awareness that MAT was part of the broader tax reform process of the 1990s.

Concept / Approach:
MAT was introduced to tackle the phenomenon of companies showing book profits to shareholders while paying little or no income tax because of generous deductions and incentives. The idea was that such companies should at least pay a minimum level of tax based on their book profits. In India, a key version of MAT, as we know it in modern exam references, was introduced in the Union Budget for the financial year 1996-97. Later amendments refined the rate and the base, but 1996-97 is typically cited as the year when MAT became an important part of the corporate tax framework aimed at zero tax companies.

Step-by-Step Solution:
1. Identify the policy instrument in question: MAT or Minimum Alternate Tax.2. Recall that MAT is associated with mid 1990s tax reform efforts, not with the early 1991-92 reform budget alone.3. Recognise that 1996-97 is widely mentioned in exam oriented material as the financial year in which MAT was introduced in its key modern form.4. Compare this with other years like 1991-92 and 1992-93, which are known more for broader liberalisation measures than for MAT specifically.5. Select 1996-97 as the correct answer from the given options.

Verification / Alternative check:
Standard coaching institute notes and many Indian economy guides for competitive exams highlight that MAT aimed at zero tax companies came in with the Budget for 1996-97. They often use this as an example of how tax policy was evolving to broaden the corporate tax base. While earlier provisions existed for book profit taxation, the exam convention associates 1996-97 with the introduction of MAT as a distinct instrument. Cross checking multiple exam oriented sources confirms this answer.

Why Other Options Are Wrong:
- 1991-92: famous for the liberalisation Budget and initial reform steps, but not for the first major MAT provision from an exam perspective.- 1992-93: part of the early reform period, yet not identified as the year of MAT's key introduction.- 1995-96: closer in time, but still not the year commonly cited in exam sources for MAT's introduction.- 1998-99: a later period when tax reforms continued, but MAT was already in place by then.

Common Pitfalls:
Students sometimes confuse the year of MAT's introduction with the broader 1991-92 reform Budget because both are associated with structural change. Others remember that MAT is a 1990s reform but cannot recall the exact year, leading to guesses among neighbouring options like 1995-96 or 1998-99. To avoid such confusion, create a mental note that the mid 1990s, specifically 1996-97, is associated with MAT targeting zero tax companies. Linking MAT with this year during revision strengthens recall for exam questions.

Final Answer:
The Minimum Alternate Tax (MAT) was first introduced in the Union Budget for the financial year 1996-97.