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Preeja

Preeja (Querist)
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21 January 2012 Treatment of MAT Credit

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 January 2012 Treatment in accounts are as follows:-

Since MAT credit is an asset, it can be recognised in the financial statements if the following conditions are fulfilled:-

It is probable that the future economic benefits will flow to the enterprise; and
Its value can be measured reliably.

The probability (i.e. more likely than not) is assessed on the basis of concept of prudence and on the basis of evidence available while preparing the financial statements. Thus, MAT credit should be recognised as an asset in the financial statements only to the extent of convincing evidence available that the company will be paying tax as per normal provisions during the period for which MAT credit can be carried forward.

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