LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

How to compute mat

amit (asst.manager) (25 Points)

20 March 2017

how to compute mat

Reply
Follow
Share

2 Replies

(Guest)

first understand MAT (Minimum alternative tax) Provision under section 115JB of Income Tax Act

go through bare act income tax and aslo refer Direct Taxes Ready Reckoner

Illustration

The taxable income of SM Energy Pvt. Ltd. computed as per the provisions of Income-tax Act is Rs. 28,40,000. Book profit of the company computed as per the provisions of section 115JB is Rs. 18,40,000. What will be the tax liability of SM Energy Pvt. Ltd. (ignore cess and surcharge)?

** The tax liability of a company will be higher of: (i) Normal tax liability, or (ii) MAT. Normal tax rate applicable to an Indian company is 30% (plus cess and surcharge as applicable). Tax @ 30% on Rs. 28,40,000 will amount to Rs. 8,52,000 (plus cess). Book profit of the company is Rs. 18,40,000. MAT liability (excluding cess and surcharge) @ 18.50% on Rs.18,40,000 will come to Rs. 3,40,40

Thus, the tax liability of SM Energy Pvt. Ltd. will be Rs. 8,52,000 (plus cess as applicable), being higher than the MAT liability.

https://www.incometaxindia.gov.in/tutorials/10.mat-and-amt.pdf