Mat Credit Utilisation Example

Give one example how to treat mat credit in financial statements in case of mat credit or mat credit utilised aganist provision for taxes during the previous year.

Mat credit utilisation example. It means you are eligible for credit 20 you are required to pay is 80 so at the time. 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. Mat under p l a c dr 100 mat credit under lo. Query on mat credit utilisation income tax.

Rs 14 43 000 rs 12 48 000 rs 1 95 000. Lets assume that income tax is 100 mat is 120 you ll have to pay 120 and a credit of the difference between both the amounts will be granted to you. Mat credit is rs 20. Mat credit is utilised if income tax payable is more than mat so as per your question mat credit allowed in the earlier years but no entry is passed suppose for 2nd year provision for tax is 100 incometax mat is 80 mat credit entitlement a c has balance 20.

September 3 2014 at 4 46 pm brij mohan gupta says. 12 july 2011 respected all whether mat credit is optional. This is with effect from ay 2018 19 prior to which mat could be carried forward only for a period of 10 ays. In case of wrong payment of taxes as per sec 77 of cgst act 2017 registered person is required to pay correct tax and he is required to apply for refund of old taxes.

If a company has mat credit of rs. 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. Such tax credit shall be carried forward for 15 assessment years immediately succeeding the assessment year in which such credit has become allowable. 10 lakh while that as per the.

For example companies have started molding their accounting policies to post lower net profits. 100 tax as per mat rs 80 tax as per normal provisions i e. 1 lakh the tax liability as per the normal provisions for fy 2019 20 is rs. Tax liability under normal provisions of tax rs 10 lacs.

Since the company is liable to pay mat the company can avail the difference of the tax payable as per mat and tax payable as per normal provisions as mat credit. Even though gst is single tax system but it has ingredients of 3 taxes cgst sgst igst and cess. For more information on mat credit refer to this article. In the above case mat credit rs.