Accounting of minimum aulternative tax

This query is : Resolved

sanish p balan (Querist)
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22 September 2012 Sir,

Please Tell me the accounting treatment of MAT, if MAT Attracts a company First time.

Actually Current year Book Profit is suppose Rs.5000 and Carried Forward Loss Rs.150000

Therefore there is no Tax liability after adjusting Previous Year Loss but Mat will attract For Rs.9250 (50000*18.5%).

Please tell me which journal entry is needed to pass in this case for creating Provission.Is the Following entry is Correct????

MAT Credit A/c Dr.9250
(Current Assets)

To Provission For MAT A/c. Rs.9250
(Current Liability)

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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22 September 2012 1) Profit and loss a/c Dr
To Provision for IT
(Being provision made under MAT)

ii) MAT Credit entitlement a/c Dr
To profit and loss a/c
(Being credit entitlement booked)

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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22 September 2012 agree with Warrier sir... first provision to be created than assets booking.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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22 September 2012 The Entries Provided by Warrier Sir are Correct as Per Guidance Note Issued by ICAI on MAT.
Although Entry Effect is Same as Written by You and by Sir.
But Entry Need to Pass as Said by Sir Only.

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