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Mat credit entitelment

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)

11 September 2014

Can you provide me MAT Credit Entitelemtnt working with example. I want know how much MAT Credit can utilized during the year ie. can we utlize more that one years MAT Credit in a single year.

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CA Meetali (Practicing Chartered Accountant) (145 Points)
Replied 11 September 2014

As per section 115JAA MAT credit arises in the year in which MAT exceeds Normal Tax. The amount of credit would be MAT minus normal Tax which shall be allowed in the next 10 years after which the credit will lapse. The amount of credit will be to the extent of Normal tax minus MAT.For example the MAT credit arises in the year 2000-2001 is Rs. 100. In the year 2001-02 Normal tax exceeds MAT by Rs. 125 the credit would be Rs. 100. In this Example if in the year 2001-02 the MAT exceeds Normat tax by Rs. 50 and in the next year Normal tax exceeds MAT by Rs. 150 then the assessee would be eligible for credit of total of Rs. 150 (100+50).If the same would be the case of year 2011-12 the credit will be allowed only of Rs. 50 as the credit of Rs. 100 will lapse.Hope this will solve your query.