To profit and loss a c while availing the mat credit the following entry is to be passed.
Guidance note on mat credit utilisation.
While writing down the carrying amount of mat credit entitlement the following entry is to be passed.
It may be noted that the institute had in the year 1997 issued a guidance note on accounting in respect of minimum alternative tax which dealt with the recognition of mat credit in the context of the guidance note on accounting for taxes on income.
18 40 000 and the liability as per the provisions of mat is rs.
The amount of mat credit would be equal to the excess of mat over normal income tax liability for which mat is paid during the said assessment year.
The starting point for mat computation is profit before other comprehensive income oci and not the total comprehensive income.
Guidance note on accounting for credit available in respect of minimum alternative tax under the income tax act 1961 23 03 06.
The amount of mat credit can be set off only in the year in which the company is liable to pay tax as per the normal provisions contained in the act and such tax is in excess of mat for that year.
In this case the liability as per the normal provisions of the income tax act is rs.
Only when it pays tax according to the normal provisions.
Mat credit can be better explained with the help of an illustration.
Profit and loss a c dr.
So let s try to understand it with the help of an example.
The said guidance note on accounting in respect of mat credit was.
A new tax credit.
A company is entitled to set off this amount in a subsequent a y.
5 2 as regards allowability or brought forward mat credit it may be noted that as the provisions of section 115jb relating to mat itself shall not be applicable to the domestic company which exercises option under section 115baa it is he clarified that the tax credit of mat paid by the domestic company exercising option under section 115baa of the act shall not be available consequent to exercising of such option.
Mat credit can be adjusted in the year in which the liability of the company as per the normal provisions is more than the mat liability.
In case of conversion of the company into a limited liability partnership under the limited liability partnership act 2008 mat credit available in hands of the company shall not be allowed to the llp.
Mat credit entitlement a c dr.
Summary of clarifications issued by the cbdt on the mat provisions applicable to ind as reporters.
In which mat credit becomes eligible to be recognized as an asset in accordance with recommendations contained in this guidance note the said asset should be created by way of a credit to the profit loss account presented as a separate line item therein 5 likes.
115jaa of the income tax act 1961 mat credit is the difference between the tax paid on mat provisions and the normally computed corporate tax liability.
Provision for taxation a c dr to mat credit entitlement a c mat credit should be reviewed at each balance sheet date.
