Mat Credit Entitlement Under Ind As

No 133 23 2015 tpl issued a faq titled clarifications on computation of book profit for the purposes of levy of minimum alternate tax mat under section 115jb of the income tax act 1961 for indian accounting standards ind as compliant companies where it answered 14 questions.

Mat credit entitlement under ind as.

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 the normal tax. Normal tax in this case means the tax payable on the basis of normal computation of total income of the company. Mat credit even though the carry forward period of credit has been allowed up to 15 years. When mat for a company is greater than its normal tax liability the difference between the mat and normal tax liability is called mat credit.

Mat and amt mat stands for minimum alternate tax and amt stands for alternate minimum tax. Mat a brief introduction. Easing the mat credit mechanism and. The assessee is a resident of a country or a specified territory with which india has an agreement referred to in sub section 1 of section 90 or the central government has adopted any agreement under sub section 1 of section 90a and the assessee.

8 lakh while the liability as per the provisions of mat is rs. Complexity in computing the book profit under mat provisions and recent changes in accounting standards have further increased the tax compliance burden for companies. As stated above only the difference between mat paid and tax liability under provisions of the act is allowed to be carried forward as mat credit the cag has analysed 88 cases in 15 states wherein the assessee had received an undue benefit of under assessment by the assessing officer a o and consequently an undue carry forward of hefty mat. Dividend on preference shares whether classified as interest costs or dividend under ind as would be considered as dividend for the purpose of mat computation and needs to be added back to book profit for the purpose of mat computation.

Tax liability of a company for fy 2019 20 under normal provisions of the income tax act is rs. Minimum alternative tax is payable under the income tax act. Book profit of the financial year in which the asset is retired disposed realised or otherwise. The asset may be reflected as mat credit entitlement.

The concept of mat was introduced to target those companies that make huge profits and pay the dividend to their shareholders but pay no minimal tax under the normal provisions of the income tax act by taking advantage of the various deductions and exemptions allowed under the act. The unavailed amount of mat credit entitlement if any should continue to be presented under the head loans advances. Treatment of current year ind as adjustments. Mat credit will be allowed to carry forward facility for a period of.