Mat Credit Entitlement Meaning

This excess rs 28 000 can be carried forward and set off against regular tax payable in future.

Mat credit entitlement meaning.

The unavailed amount of mat credit entitlement if any should continue to be presented under the head loans advances. It must also be noted that deferred tax charge is not covered by any other clause of the explanation to section 115jb 2 and is therefore not required to be added back in the computation of book. A tax credit scheme is introduced by which mat paid can be carried forward for set off against regular tax payable during the subsequent fifteen years period subject to certain conditions as under when a company pays tax under mat the tax credit earned by it shall be an amount which is the difference between the amount payable under mat and. They do so by showing the mat credit as mat credit entitlement to the credit of the income and expenditure amount.

Just because companies opting for lower tax are spared of mat it should not mean they cannot claim past mat credit. So excess tax payable will be rs 1 48 000 rs. Meaning of book profit as per explanation 1 to section 115jb 2 book profit for the purposes of section 115jb means. Thus the tax liability of sm energy pvt.

The asset may be reflected as mat credit entitlement. 10 lakh while that as per the. If this circumstance does not arise and mat credit stays in the loans and advances column of the company s balance sheet till the end of the specified period after which it is simply written off. The difference arising out of mat paid and mat credit entitlement can be treated as tax paid during the year.

To mat credit entitlement account. Mat credit entitlement loans and advances dr 20 to mat expenses indirect expenses 20 summarizing the above situation the expenses debited to profit and loss will be rs 80 balance in mat expenses a c short term provisions shows mat payable of rs 100. Such tax credit shall be carried forward for 15 assessment years immediately succeeding the assessment year in which such credit has become allowable. All companies that are liable to pay mat have to furnish a mat report as prescribed in form 29b.

Rs 14 43 000 rs 12 48 000 rs 1 95 000. The maximum amount of mat credit that you can claim cannot exceed the difference between the normal tax liability and the mat liability in the year for which the mat credit is being availed. While the ordinance enacting the lower tax does not ban companies from availing mat credit there is no clarity on how mat credit will be allowed under the present law. In the year of set off of credit the amount of credit availed should be shown as deduction from the provision of taxation on the liabilities side of the balance sheet.

If a company has mat credit of rs. However applicable mat 18 5 of rs 8 lac rs. Mat liability excluding cess and surcharge 15 on rs 18 40 000 will come to rs.