Mat Credit Set Off Calculation

Set off shall be allowed to the extent of difference between the tax on the total income under normal provision and tax which would have been payable as per mat under section 115jb.

Mat credit set off calculation. Thus the tax liability of sm energy pvt. Mat liability excluding cess and surcharge 15 on rs 18 40 000 will come to rs. The set off in respect of brought forward mat credit shall be allowed in the subsequent year s to the extent of the difference between the tax on its total income as per the normal provisions and as per the mat provisions. And carry forward losses to rs nil is the above calculation correct.

Provision of mat minimum alternate tax for payment of tax by certain companies section 115jb calculation of book profits for the purpose of mat section 115jb tax credit in respect of tax paid on deemed income under mat provisions section 115jaa amounts expressively allowed as deduction section 30 to 37 section 40a of income tax act. A domestic company is taxable at the rate of 25 if its turnover or gross receipt does. Unabsorbed mat credit will be allowed to be accumulated subject to the seven year carry forward limit. Set off of mat credit brought forward is allowed to the extent of the difference between tax on total income and tax which would have been payable u s 115ja or u s 115jb as the case may be.

Under existing rules book profit is calculated as per section 115jb of the income tax act 1961. 115jaa does not expressly provide for set off of mat credit of the transferor company by the transferee company. 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. Minimum alternate tax calculation example.

The taxable income of abc company not availing any tax exemptions incentives as per the provisions of the income tax act 1961 is rs. Can i set off only 6 5 crs of my loss and bring the total income to rs. 8 52 000 plus cess as applicable being higher than the mat liability. 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.

The tax liability in this case would be rs. In the assessment year when regular tax becomes payable the difference between the regular tax and the tax computed under mat for that year will be set off against the mat credit available. Mat credit shall be allowed to be set off in a year when the tax becomes payable on the total income in accordance with the normal provisions of the act. Only when it pays tax according to the normal provisions.

The credit allowed will not bear any interest. A company is entitled to set off this amount in a subsequent a y.